The dispute has gotten so heated, Bank of America Corp. last month surrendered its role as administrator of Travelport’s loan to avoid taking a side in the feud, while Kirkland & Ellis recently resigned as the company’s legal representation, according to people familiar with the matter.
With the sides at loggerheads, the private equity owners supplied the financing themselves in a loan backed by the disputed collateral, a move that’s likely to further inflame the situation.
Representatives for Travelport, Elliott, Siris, GSO and Bank of America declined to comment, while Kirkland & Ellis didn’t have an immediate comment.
‘Fight Like Dogs’
Industry veterans say creditors should no longer be surprised when private equity sponsors use asset transfers, spinoffs, carve outs and other such moves following a number of high profile and hotly contested maneuvers in recent years.
“Anyone professing to be shocked by it probably hasn’t been around very long,” said Philip Brendel, a senior credit analyst at Bloomberg Intelligence.
Yet with creditors so far showing little appetite to push for stronger covenants in borrowing documents, market watchers warn to expect more brawls in the months and years ahead.
“Rates were suppressed long after they should have been; it drove yield hunger and a non-bank explosion that created misalignments,” Arena Investors’ Zwirn said. “Now they’re learning once again, there are consequences. We are at just the beginning of this thing. They’re going to fight like dogs to avoid those consequences.”
This article was provided by Bloomberg News.