Retaining key management at a distressed company in the midst of an out-of-court restructuring can be necessary for the success of the restructuring. To realign incentives, private credit lenders need to consider reloading and restructuring equity awards, retention bonuses and change in control payments to maximize the possibility of recouping their investment and promoting future profitability.

Though every out-of-court restructuring raises different issues, creditors taking the keys to a distressed company must: (1) identify talent for retention through the restructuring process and continued retention by the post-closing organization; (2) assess the efficacy and potential liabilities of existing compensation arrangements; and (3) structure new incentive compensation programs that are designed to encourage the repayment of debt and growth of the company after the restructuring. READ MORE