Pryor Cashman Partner Seth H. Lieberman, chair of the Bankruptcy, Reorganization + Creditors’ Rights Group and co-chair of the Corporate Trust Practice, was quoted in a Law360 article discussing the growing impact of tariffs in corporate restructurings.

In the article, “Tariffs Are Causing Bankruptcies, And A New DIP Covenant,” Seth weighed in on how tariffs are quickly becoming the latest disruptive force in the bankruptcy world—on par with the dot-com crash, the Great Recession, the pandemic, and the rise of e-commerce. Seth shared:

“’There's always a chief or principal reason that runs throughout a recent spate of filings,’ he said, adding that tariffs are emblematic of deeper economic uncertainty.”

This evolving risk landscape is now influencing how distressed companies secure financing. For example, At Home’s $600 million debtor-in-possession (DIP) financing package includes a tariff-specific covenant—potentially the first of its kind. It requires the company to revise its long-term business projections if tariffs are increased beyond the levels in place at the time of its Chapter 11 filing.

Seth noted that he would not be surprised if similar DIP financing in chapter 11 cases appear in future bankruptcy cases, as lenders and companies alike grapple with the unpredictability of global trade policies.

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