Jurisdiction(s):
United Kingdom

Key definition

Credit crunch definition

What does Credit crunch mean? A credit crunch is a period in which banks and other lenders sharply restrict the supply of credit and tighten lending terms irrespective of borrower demand. In practice, lawyers see this through withdrawn or reduced commitments, tougher covenants and security packages, higher pricing and fees, constrained underwriting and syndication, and difficulties refinancing existing debt. The term is descriptive rather than defined in legislation or case law, and is used across banking and finance, capital markets, restructuring and insolvency, and real estate finance. Typical legal issues include operation of market disruption and cost of funds provisions in LMA-style facility agreements, reliance on...

Informal (ad hoc) creditors’ committees in UK restructurings: role, membership, LMEs, confidentiality and guidance

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

Informal creditors' committees

In numerous restructurings, creditors often convene informal (ad hoc or unofficial) committees instead of formal ones (see Practice Note: Formal creditors' committee in a restructuring), which can significantly support discussions between the debtor company and its creditors. Since the 2007/8 credit crunch, the emergence of alternative finance providers, such as hedge funds and other investors, has amplified the influence of these informal groups. Typically assembled by bondholders, noteholders or unsecured creditors, they are playing a bigger part in the current surge of informal liability management exercises (LMEs) (see Practice Note: FAQs on Liability Management Exercises). There are no statutory provisions or best practice standards governing how such committees are set up, and their make-up and operation are even more flexible than for formal committees. Informal committees possess no defined powers, and their members owe no fiduciary obligations to fellow members or to other creditors. Members are not, by default, entitled to recover their expenses unless the finance documentation provides for it, or it is agreed as part of the restructuring...

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Web page updated on 21/05/2026

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