For the better part of a decade, the legal and financial infrastructure surrounding coercive liability management exercises has been constructed almost entirely around one question: are these LME transactions contractually permissible? The debates over sacred rights, open market purchase exceptions, and the scope of majority-lender amendment powers have consumed courts, practitioners, and law review pages alike.
A second question, whether the boards and management teams that approved these transactions discharged their fiduciary duties to the enterprise, has attracted remarkably little attention.
That may be about to change. A forthcoming article in the Yale Law Journal by Harvard Law Professor Mark Roe and research fellow Vasile Rotaru, drawing in part on 9fin's proprietary transaction database, assembles a large-sample empirical record of how coercive, non-pro rata LMEs actually perform. While the authors are careful not to overstate the legal implications, the data materially raises the cost of the presumption that approving a coercive LME is a legitimate exercise of board business judgment.
Most coercive LMEs end in bankruptcy anyway
The Roe-Rotaru study analyses 89 coercive, non-pro rata LMEs completed between 2014 and 2025, identified using the specialist restructuring platforms with the most comprehensive industry coverage, including 9fin. The authors examined...
