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Private Credit Injects New Risk Into Property Lending; LifeScan to Cede Control to Lenders
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Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Wednesday, July 16. In today's briefing, while private credit is bringing speed and liquidity to real-estate lending, its rapid growth to finance highly leveraged borrowers is raising concerns too. And glucose-monitor maker LifeScan filed for bankruptcy.
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A view of an empty office floor in downtown San Francisco. Photo: Reuters
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Private credit brings risk and liquidity to CRE. Interest rates staying higher for longer and recent declines in property values are expected to drive more CRE borrowing to nonbank lenders in the coming years. Against market headwinds, private credit has stepped in to fund borrowers that may not meet traditional banking standards.
As more commercial property lending shifts to nonbank financing, risk gets added to the system, according to Moody’s, while private-credit lenders can also be more nimble in meeting market demands and borrowers’ needs.
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The bankruptcy court building in Houston. Photo: Callaghan O’Hare for The Wall Street Journal
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Platinum Equity’s LifeScan files for bankruptcy. Glucose-monitor maker LifeScan filed for bankruptcy in Houston with an agreement to reduce most of its $1.7 billion in debt while handing control to its lenders.
The Malvern, Pa.-based health technology company said the restructuring plan would cut more than 75%, or roughly $1.3 billion, of its debt, according to a company press release.
Under the current agreement, the Platinum Equity-owned company’s second-lien lenders will own roughly 75% of the reorganized business, and the first-lien creditors will own a minority stake, according to a person with knowledge of the matter. The terms are subject to change and must be approved by the court to take effect.
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The Uncertain Future of Renewable Energy
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After the passage of President Trump’s “Big Beautiful Bill,” renewable energy companies are bracing for more challenging times. The law is set to end Biden-era subsidies for clean energy, with the Congressional Budget Office estimating that the industry could lose half a trillion dollars in tax incentives over the next decade.
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