Exit Consent
An exit consent is a consent to amend existing debt documents that is delivered by a creditor in connection with exchanging or tendering that debt, typically just before the creditor exits the old instrument.
The consent is linked to the holder's departure
The defining feature is timing. The holder votes to change the old debt and then exchanges or tenders out of that debt.
That means the economic burden of the amendment falls primarily on creditors who remain behind.
Exit consents commonly target non-payment protections
Sacred rights or statutory protections can restrict changes to principal, interest and maturity without each affected holder's consent.
Issuers therefore often focus exit consents on covenants, collateral provisions, reporting requirements and other protections that can be changed by a majority or specified threshold.
The mechanism can create participation pressure
A creditor considering whether to reject an exchange must compare the new instrument not with the old instrument as it exists today, but with the old instrument after the proposed amendment.
If the remaining debt will be materially weaker, staying out becomes less attractive.
LMEs can use exit consents as a priority tool
The American Bar Association's 2026 analysis describes aggressive LMEs in which majority lenders amend the old agreement to permit a transaction and strip protections immediately before exchanging into new rights.
The legal analysis remains document-specific.
Exit consents can be more coercive than the headline exchange price suggests
Consider an exchange offering new notes worth 95 cents on the dollar for old notes currently worth 90. The economic improvement looks modest.
Now add an exit consent that removes the old notes' restrictions on additional secured debt and asset transfers. A holder that refuses the exchange may not be keeping a 90-cent instrument. It may be keeping a materially weaker instrument that could fall further once the amendments become effective.
The true comparison is therefore:
value of the new security received by tendering versus value of the old security after the exit-consent amendments.
That gap is what gives the mechanism much of its negotiating force.
Common mistakes
Treating exit consent as the exchange itself It is the amendment vote linked to the exchange.
Assuming every covenant can be stripped Sacred rights and statutory protections can limit the vote.
Ignoring the holdout's post-exchange instrument That weakened residual debt is often the point of the mechanism.
Example
Holders of 70% of a note issue agree to exchange into new secured notes. As a condition to participating, they also consent to remove several restrictive covenants from the old indenture. After closing, the participating holders own the new notes while non-tendering holders remain in the old notes with fewer protections.
Example
Holders of 70% of a note issue agree to exchange into new secured notes. As a condition to participating, they also consent to remove several restrictive covenants from the old indenture. After closing, the participating holders own the new notes while non-tendering holders remain in the old notes with fewer protections.
Professional note
Analyze the amendment independently from the exchange consideration. An exit consent can leave principal and stated interest untouched while materially changing collateral, covenants, remedies or bargaining leverage.
Related terms
- Required Lenders
Required Lenders are the lenders holding the contractually specified percentage of loans, commitments or exposures needed to approve many amendments, waivers, directions and other collective lender actions under a credit agreement.
- Sacred Rights
Sacred rights are lender protections covering specified core economic or structural loan terms that cannot be amended or waived solely through the ordinary Required Lenders vote and instead require consent from each affected lender or another heightened voting threshold.
- Debt Exchange Offer
A debt exchange offer is an offer by an issuer or borrower to holders of existing debt to surrender that debt in exchange for newly issued debt or other securities under stated terms and conditions.
- Non-Pro-Rata Exchange
A non-pro-rata exchange is a debt exchange in which creditors within the same existing class or tranche are not offered or do not receive the same opportunity, allocation or economics in proportion to their holdings.
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