When Peter Ehrenberg testified in a Georgetown, Del., courtroom in December, it marked a first in the Lowenstein Sandler M&A partner’s 34-year career. Never before had he taken the witness stand to defend one of his contracts. Then again, nothing like what happened between his client, Cerberus Capital Management, and United Rentals Inc. had ever befallen one of his deals.
The trouble started Nov. 14, when Cerberus announced that it was backing out of a $4 billion agreement to buy United Rentals. That a private equity buyout collapsed was hardly unique — the latter half of 2007 was the worst of times for the credit markets, and by extension, for dozens of deals signed earlier in the year. Suddenly, lenders had no way to off-load the huge loans they had agreed to issue to finance multibillion-dollar private equity deals. With the banks looking for any possible way out of their debt commitments, deals seemed to blow up every week. United Rentals was just the latest casualty. But this is where the similarity to most other failed deals ends.
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