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.

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