The increasing use of unitranche financing, both domestically and abroad, has created new opportunities for middle market loan participants. However, lenders must understand the legal issues and potential bankruptcy risks unique to unitranche structures.

The volume of middle market unitranche financings continues to rise in the US and European loan markets. Unitranche loans combine separate senior and subordinated debt financings into a single debt instrument. While unitranche financing is not new, the increased use of this type of financing, both domestically and abroad, creates new opportunities for middle market loan participants. However, unitranche financing also poses risks, and lenders who participate in unitranche financings must understand the related legal issues in order to adequately mitigate these risks.

Originally published in Practical Law Company on August 9, 2016.