TY - JOUR T1 - Control Through Observer Rights and a CRO JF - The Journal of Private Equity SP - 56 LP - 58 DO - 10.3905/jpe.2015.18.2.056 VL - 18 IS - 2 AU - Laurence Smith Y1 - 2015/02/28 UR - https://pm-research.com/content/18/2/56.abstract N2 - Two of the weapons in the arsenal of a second lien, mezzanine, or other leveraged lender are observer rights and the ability to mandate that a borrower engage a chief restructuring officer (CRO). This article examines each of those rights and suggests reasonable limitations on them, reflecting a balance between the legitimate interests of borrower and lender. In situations in which a borrower is highly levered and has limited financing options, it may be forced to accept whatever terms a lender demands, but this article assumes the parties have relatively equal bargaining power.TOPICS: Private equity, portfolio construction, legal/regulatory/public policy, manager selection ER -