Clarion Capital says Serta Simmons ruling may curb coercive LMEs in CLO market

• Clarion Capital Partners flagged a July 2026 credit-market backdrop of sub-1% trailing 12-month loan defaults, below pre-pandemic averages near 2%.
• Defaults plus distressed exchanges hit a three-year low by end-June; borrowers logged 22 straight quarters of EBITDA growth, with Q1 up 8.9%.
• Private-equity-driven liability management exercises (LMEs) remained a key risk, lifting the 2020–June 2026 default rate by count to 3.21% from 1.68%.
• A July 7 Houston bankruptcy ruling tied to Serta Simmons awarded excluded lenders USD 400 million, with participating majority lenders held liable pro rata.
• The decision could curb coercive LMEs, raise litigation risk for repeat users, support secondary loan prices, and improve recoveries by reducing split outcomes.

Disclaimer: This news brief was created by Public Technologies (PUBT) using generative artificial intelligence. While PUBT strives to provide accurate and timely information, this AI-generated content is for informational purposes only and should not be interpreted as financial, investment, or legal advice. Clarion Capital Partners LLC published the original content used to generate this news brief on August 03, 2026, and is solely responsible for the information contained therein.