Distressed Portfolio Companies - Imminent Conflicts of Interest for Sponsors

In the context of the continuing financial crisis, portfolio companies increasingly face economic difficulties. While interests of the financial sponsor and the management of the portfolio company are regularly aligned in stable financial waters, this may rapidly change when the portfolio company slides into a distressed situation.

The attached presentation:

• provides an overview of the typical post-LBO structure of a portfolio company
• discusses the frameset of interests and conflicts between the various parties involved, and
• analyzes practical implications arising from potential conflicts of interest.

If you have any questions, please feel free to contact any of your regular contacts at Cleary Gottlieb.