Economy · August 4, 2022

Businesses face the wrath of the lender after the loan collapse

INVESTORS furious at the rapid collapse of a leveraged loan issued in June hired a law firm to examine legal options on what they consider inadequate disclosure during the debt marketing process.

The loan, issued by tech firm Avaya Holdings Corp., plummeted nearly 30 cents in the past week after the company slashed its quarterly revenue and earnings expectations and fired its chief executive. The rapid change in Avaya’s fortunes, revealed just weeks after debt hit investor accounts, left some buyers wondering why the information wasn’t disclosed when Avaya was marketing the deal with help from Goldman Sachs Group. Inc. and JPMorgan Chase & Co.

Investors who bought the company’s $ 350 million incremental leveraged loan hired the law firm Akin Gump Strauss Hauer & Feld to explore their options, according to experts in the field, who asked not to be named while discussing a private transaction. Some holders of the company’s other first-degree loans have also joined the group, the people said.

Representatives from Avaya, Goldman Sachs and JPMorgan declined to comment. A representative of Akin did not respond to requests for comment. LevFin Insights previously reported on Akin’s hiring and other elements of the situation.