Private credit ·
Bloomberg: sponsors push force-majeure-style clauses that pause default remedies for AI disruption in new buyout loans
Bloomberg reports that private equity firms are adding force-majeure-style language to new buyout financings that could let companies stop the clock on defaults they determine were caused by AI disruption, alongside events such as pandemics, energy price spikes, war and terrorism. The language has appeared in at least two leveraged buyout financings since September, including a €470 million loan, according to people familiar with the deals; interest still accrues but lenders' remedies are suspended. Lenders had similar language struck from another large European leveraged-loan deal. A Cahill Gordon & Reindel partner is quoted saying lenders are closely reviewing sponsor language seeking event-of-default flexibility tied to AI.
Why it matters for deal teams: A new clause type to catch in document review: credit teams screening drafts for default and grace-period carve-outs should add AI-disruption triggers to their checklist.
Source: Bloomberg, syndicated by Mint ↗