Wall Street’s Favorite Bankruptcy Tactic Gets Loans Repaid in Cash
- Roll-ups that bump up old money have become more extreme
- Rite Aid may have largest ever roll-up of new-to-old money
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Lenders to bankrupt firms are increasingly demanding the use of a controversial contract clause that bolsters their investments in exchange for giving companies a chance at survival.
Known as a roll-up, the provision moves existing debt to the front of the repayment line in lockstep with newly lent money. Senior lenders often require the maneuver when no one else is willing or able to give a bankrupt company turnaround financing.