'Mezz' Lending — What Is It, How Does It Work?

Law360, New York (April 15, 2009, 12:00 AM EDT) -- With banks making fewer senior loans, and the market for traditional second-lien financing all but gone, mezzanine loans have increasingly been used to bridge the financing gap.

Though mezzanine loans originally gained popularity in the real estate context, in the past couple of years companies have turned to mezzanine lenders to provide term loans for acquisitions and other corporate needs, in larger amounts and in greater numbers than ever before.

As with all types of debt financing, mezzanine loans have been negatively impacted by the economy...
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