Liability management exercises introduce aggressive restructuring tactics into credit markets, enabling distressed corporate borrowers and private equity sponsors to exploit textual gaps in loan agreements to strip collateral or subordinate existing lenders. To counter this opportunism, creditors increasingly form cooperation agreements that establish a unified bargaining front, restrict secondary debt transfers, and prohibit individual side deals with the borrower. Although these agreements restore creditor leverage and mitigate restructuring uncertainty, they also coordinate economic conduct among horizontal rivals. Consequently, distressed debtors and excluded lenders have begun challenging these alliances under Section 1 of the Sherman Act, questioning whether such collective action constitutes an unlawful restraint of trade.
This Comment evaluates the antitrust merits of debtor and creditor claims against cooperation agreements under federal antitrust frameworks. Because collective creditor action facilitates out-of-court workouts, preserves enterprise value, and supports credit availability, courts will likely review debtor challenges under the rule of reason rather than condemn them under the per se rule. Under this standard, debtors will struggle to prove net competitive harm unless creditors exercise dominant market power over new credit or impose transfer restrictions that exceed legitimate collective bargaining needs. Conversely, excluded lenders maintain stronger legal claims against exclusive, bare-majority coalitions that bar rival participation and negotiate non-pro-rata transactions that subordinate non-signatories. Because such exclusive pacts mirror concerted refusals to deal and generate market inefficiencies, courts should apply antitrust remedies as a residual regulator when credit agreements offer no alternative contractual protection.