When a portfolio company underperforms, an equity sponsor will want to assess the degree of negotiating leverage the company’s lenders have against the company under the circumstances, which can play a significant role in defining the terms of waivers or amendments or of an eventual workout to be sought with the lenders. Strategic options available to a sponsor will depend, among other things, on the degree of leverage, or perceived leverage, held by lenders. Two recent court decisions may impact this balance and the relative strength of lenders versus their distressed borrowers.