Protecting Private Credit Deals: Pre-Transaction Safeguards And Post-Transaction Recovery Strategies

The private credit market has exploded — and so has the risk hiding inside it. 12% of private credit loans are now PIK. 40% of borrowers have negative cash flow. And $700 billion was raised in just the last two years alone. In this Fireside Chat from the M&A Advisor's 2026 Distressed Investing Summit, a powerhouse panel breaks down how lenders can protect themselves before a deal goes sideways — and what to do when it does. From structural protections and board governance to chasing a $50M superyacht across three continents, this episode covers the full playbook. 🎙️ **Protecting Private Credit Deals: Pre-Transaction Safeguards and Post-Transaction Recovery Strategies** 📍 Four Seasons Resort, Palm Beach, Florida 🏛️ Deal Forum | 2026 Distressed Investing Summit **SHOW NOTES:** **Episode:** Protecting Private Credit Deals — Pre-Transaction Safeguards and Post-Transaction Recovery Strategies **Event:** Deal Forum — 2026 Distressed Investing Summit | Four Seasons Resort, Palm Beach, FL **Host:** Steven G. Kobre, Co-Founder & Lawyer, Kobre & Kim **Panelists:** - **Andrew Rabinowitz** — President & General Counsel, Arena Investors; former GC, 26North; two decades at Marathon Asset Management - **Hadley Ma** — Founder & Managing Partner, Ferghana Investment Partners; former Head of Originations & Underwriting, MCG Investment Group - **Jeff Marwil** — Founder, Ocean Boulevard Strategic Advisors; 37 years in corporate restructuring and Chapter 11; former Co-Head of Bankruptcy & Restructuring, Proskauer - **Jef Klazen** — Partner, Kobre & Kim; international asset and judgment enforcement **What You'll Learn:** *The Warning Signs:* PIK loans doubled in five years. Borrowers with negative cash flow jumped from 25% to 40%. Semi-liquid funds went from 6% to 53% of the market. $700B raised in two years into a market that was $350B a decade ago. The stress is structural. *Underwriting That Holds Up:* Strong collateral, revenue predictability, and recession-resilient sectors matter. But two things are chronically underweighted — underwriting the exit from day one, and securing a real secondary source of repayment. *Operationalizing Protection:* Ferghana takes read-only access to all borrower bank accounts at inception, plus passwords in escrow for IP and other assets. The goal: no scrambling when a restructuring starts. *The Board Seat Debate:* Private credit is the new private equity — one rung up the capital structure. If you can't get an independent director at inception, it should trigger automatically at default. Pre-approve a slate of 3–5 names in the loan documents so you're not fighting over it when things go bad. *The Lottery Ticket Problem:* Distressed equity wants to gamble their last dollar. The lender wants it preserved. The independent director bridges that gap — making decisions in the company's best interests under the business judgment rule. *Red Flags & Asset Transfers:* Founders quietly move assets to spouses and children months before a default. One guarantor disclosed a $50M superyacht — but it was owned by a Cayman entity, then transferred to his spouse. Kobre & Kim tracked it to Italy and locked it down. In another case, bank statements were outright doctored. Lesson: trust but verify, early. *The Outlook:* $90 trillion in global financing needs over the next decade. Europe is 5–10 years behind. More defaults mean more opportunity — for those positioned to move. **Connect:** Spotify | Apple Podcasts | YouTube | [editor@maadvisor.com](mailto:editor@maadvisor.com) | maadvisor.com