Creditors, though, are not regarded as the members of a company, yet the role they play in maintaining a company cannot be denied. They are the sole functionaries of the company, in one word. They provide credit to the company for running its business, as without finance a company holds no...

I propose a theoretical framework in which lenders may suffer repayment preference shocks that encourage early and costly termination of a loan contract. Covenant-lite loans limit the circumstances in which lenders can withdraw or renegotiate credit agreements, and thus insulate lenders from...