American Securities’ Vibrantz Restructuring Highlights Escalating Sponsor Aggression in Liability Management

As part of its restructuring of portfolio company Vibrantz Technologies last month, American Securities required lenders to sign agreements restricting discussions with peers before it would disclose terms, Bloomberg reports.

People familiar with the matter said Vibrantz launched its liability management exercise—labeled “tantamount to default” by S&P—with around 90 percent support from its creditors after reaching deals with two separate groups.

Then, the borrower reached out separately to cut side deals with a handful of larger lenders, including GoldenTree Asset Management, Monarch Alternative Capital, and Oak Hill Advisors. The select group agreed to provide a fresh $350 million first-out loan, pushing all excluded lenders further down the stack.

Under the Vibrantz’s communications restrictions, lenders considering the initial proposal were forced to decide whether to support the transaction or break from the creditor group without any information on the terms peers were receiving.

For the smaller lenders left out of the separate discussions, the side deal means they will now be repaid only after the first-out group is made whole.

The situation fits a broader pattern of sponsor-led restructurings.

“Sponsor behavior is getting even more aggressive in a market where lenders for the last few years have leaned in and played the game,” Scott Greenberg, a partner at Gibson Dunn & Crutcher, told Bloomberg. “The weaponization of NDAs and other ways to prevent lenders from talking to one another seems to be pushing the limits and inconsistent with the collective action provisions in credit docs that require lenders to coordinate,” he said.

This is part of the reason why the market has seen a surge in the use of co-operation agreements over the past 24 months. According to data from 9fin, around 45 co-op agreements were entered into in the US in 2024, up from an average of just four per year between 2018 and 2023.

Continuing the back-and-forth, sponsors have begun inserting language into credit agreements specifically targeting co-ops, such as a recent Thoma Bravo clause that forced lenders to disclose any such moves, giving the firm an opportunity to preempt collective action before momentum builds.