Rescue Financing: Roll-Ups in the USA, Italy, Singapore and Spain

Rescue financing is often a feature of large cross-border restructurings. Lenders are reluctant to loan additional capital to a company that has entered a restructuring process unless they are granted first lien security over the debtor’s property. Where all of the debtor’s property is already subject to liens, the lender may seek to prime existing lenders and other advantageous credit terms. In certain jurisdictions, a practice has developed to allow lend- ers not only to obtain first lien status, but also to ‘roll-up’ part of their pre- existing pre-petition loans into the new money loan with senior lien status. Over the past decade, roll-ups have become a common feature in rescue financing in the US, but elsewhere the idea of rolling-up pre-petition debt is relatively novel. In this paper, the first aspect discussed is what roll-ups are and how they feature in US Bankruptcy Law. The paper then moves to discuss the evolu- tion of roll-ups in super priority rescue financing in Singapore with the ap- proval of roll-up financing in Re Design Studio Group Ltd and other mat- ters1 in 2020. It then turns to Italy, where roll-ups are virtually unknown to the restructuring practice, for a discussion of whether roll-ups are aligned with the Italian bankruptcy regime and should be expressly allowed. Finally, the paper looks at Spain, where roll-ups are implicitly allowed under refinancing agreements but are not available under formal insolvency proceedings as they deviate from the par condicio creditorum principle.