Oaktree Capital Group is contesting Apollo Global Management LLC’s role in restructuring Claire’s Stores Inc., while Aurelius Capital Management is zeroed in on plans by Sycamore Partners to turn around Nine West Holdings Inc., according to a Bloomberg News analysis. Both funds claim that the sponsors deprived other creditors of fair recoveries, either by extracting assets before the cases reached court or through their reorganization strategies afterward. “Creditors have become more sensitive to private equity sponsors using loopholes to take value away from them,” said Anthony P. Canale, global head of research at the independent firm Covenant Review. He cited coercive debt exchanges that give cooperative creditors a higher priority than holdouts, and strategies that move valuable intellectual property out of lenders’ reach.
