This blog highlights key takeaways from the September 2025 American Bankruptcy Institute (ABI) webinar, hosted in partnership with SC&H Capital. For the full depth of discussion, we encourage you to watch the full recording.
Key Topics Discussed
Drivers behind growth in private-credit refinancing demand
Challenges facing borrowers in today’s market environment
What lenders expect when evaluating a refinance request
Why flexibility and communication are critical for success
How liability management exercises (LMEs) may impact private credit
Moderated by Matt Locascio, Principal at SC&H Capital, the webinar featured two seasoned restructuring and finance professionals: Gabriel Yomi Dabiri, Global Head of Private Credit & Direct Lending at Squire Patton Boggs, and Seth Kleinman, Chair of Special Situations and Vice Chair of Bankruptcy & Restructuring at Benesch.
Why Private Credit’s Growth Matters Now
Private credit has become a major source of capital for middle-market companies — offering speed, certainty, and customized structures that traditional banks often cannot match. As the asset class has grown, so has the volume of loans approaching maturity. This natural aging of portfolios, combined with uneven market performance across sectors, is pushing more borrowers to explore refinancing options.
That growth also means lenders are handling more credits at different stages of the business cycle. With that has come a new set of expectations — and a sharper focus on forward visibility, risk management, and long-term stability.
Challenges Facing Borrowers in the Current Market
Against that backdrop, borrowers seeking to refinance are encountering a set of hurdles that look very different from those of prior years. Sector-specific volatility — including tariff exposures, shifting demand, and supply-chain disruptions — is affecting cash flow and performance metrics. Lenders are responding by taking a closer look at projections, liquidity profiles, and downside resilience.
Borrowers who expect a straightforward maturity extension may find that refinancing has become a more rigorous process. Many lenders now want fully developed operating plans, stress-tested forecasts, and clear explanations of how management plans to navigate macroeconomic pressures.
This shift in expectations leads directly into what lenders consider essential when evaluating a refinancing request.
What Lenders Are Looking For
The panel underscored that refinancing success increasingly hinges on how borrowers engage with their lenders. Three themes consistently shape lender decision-making:
- Proactive communication. When borrowers openly discuss challenges early — whether related to liquidity, covenants, or performance — lenders are more willing to consider creative solutions. Surprises late in the process can significantly undermine trust.
- Willingness to consider alternative structures. Rigid expectations can be a red flag. Borrowers who show openness to mezzanine capital, PIK features, preferred equity, or multi-layered structures tend to see better outcomes.
- Credible financial planning. Lenders now expect detailed projections and scenario analyses. A strong refinancing proposal includes not just base-case financials, but a plan for navigating potential downside scenarios.
When performance weakens further, and refinancing becomes more challenging, the process shifts into more complex territory.
When Distressed Refinancing Requires a Different Playbook
Not every borrower can refinance under traditional terms. The panelists highlighted that many private-credit lenders have not yet experienced a full downturn cycle, which means some may be less prepared for sustained distress.
In distressed situations, both costs and scrutiny increase. Borrowers may face additional fees — such as forbearance fees, amendment fees, and higher advisory costs — as they navigate tightening liquidity. In these cases, incremental capital may require specialized lenders or hybrid solutions that come with enhanced economics, warrants, or board rights.
As more varied stakeholders enter the capital structure, borrowers and advisors must be prepared for more negotiation and more structure than what traditional refinancing requires.
Are Liability Management Exercises (LMEs) Coming to Private Credit?
The conversation also touched on LMEs, which have become commonplace in the broadly syndicated loan market. The question is whether similar tactics could appear more frequently in private credit.
Historically, private credit’s relationship-driven nature has discouraged aggressive maneuvers. Still, as more deals incorporate mixed capital structures — including both private-credit and syndicated lenders — LME-style transactions may become more relevant. Borrowers and advisors should stay attuned to this shift, especially as capital structures become more complex.
This trend aligns with a broader move toward flexible capital approaches, particularly for companies with uneven or cyclical performance.
Best Practices for Borrowers Preparing to Refinance
Pulling from the panel’s insights, borrowers can improve refinancing outcomes by focusing on a few core principles:
- Start the conversation early to build trust and maintain open communication channels.
- Present alternative structures instead of pushing for a single solution.
- Provide robust, credible forecasts backed by operating details and sensitivity analyses.
- Remain open to alternative capital providers when existing lenders have limited flexibility.
These steps help position borrowers for a smoother refinancing experience and strengthen their credibility with lenders who are operating with heightened awareness of risk.
What to Watch Next in Private-Credit Refinancing
Looking ahead, the panel expects refinancing volume to continue rising — driven by upcoming maturities, uneven sector performance, and market recalibration. Several themes are likely to shape the next phase:
- More refinancing activity in stressed sectors like logistics, manufacturing, and tariff-impacted industries
- Greater participation from regional banks and international lenders
- Heightened underwriting discipline, especially among smaller or newer funds
- More hybrid and flexible capital structures used to solve liquidity gaps
These shifts point to a marketplace that is becoming more sophisticated — and more demanding — for borrowers and advisors.
Conclusion: A More Strategic Approach to Refinancing
Refinancing in today’s private-credit market requires preparation, transparency, and a willingness to explore new capital solutions. Borrowers who bring credible plans, flexible structures, and proactive communication will be better positioned to secure support from lenders navigating the same volatility. And for lenders, this environment underscores the importance of balancing discipline with an understanding of long-term value.
Speakers
Moderator: Matt LoCascio, Principal, SC&H Capital
Gabriel Yomi Dabiri, Global Head of Private Credit & Direct Lending at Squire Patton Boggs
Seth Kleinman, Chair of Special Situations and Vice Chair of Bankruptcy & Restructuring at Benesch
About American Bankruptcy Institute
The American Bankruptcy Institute provides congressional leaders and the public with reporting and analysis of bankruptcy regulations, laws, and trends. With 18 different committees and more than 12,000 members in multi-disciplinary roles, ABI provides educational conferences, networking opportunities, and other events to strengthen relationships in the industry and develop leadership roles. To learn more visit www.abi.org.
Want More? Check out the Other Webinars in the Series
Part 1 – From Default to Ownership: Inside Private Credit Lender Workouts
