York Capital CLOs and WorldStrides International

The case follows the debt restructuring of WorldStrides International, a travel program provider in the education market, after the onset of COVID-19. The pandemic severely impacted the travel industry, creating challenges for many companies like WorldStrides, which were highly-levered and whose debt was held by a wide range of institutional investors, including collateralized loan obligations (CLOs). By May 2020, WorldStrides needed to restructure its debt, and there were two proposals that were being circulated, one from the company’s private equity sponsor and the other from a hedge fund holding some senior secured debt. This case takes the perspective of York Capital Management, a CLO manager that held WorldStrides’s senior secured debt. Both existing proposals had aspects that would have put stress on the structure of York’s CLOs at the time. This case takes a deep dive into the economics of CLOs and their internal compliance processes. With this information York’s CLO team needs to suggest to their lending group whether to accept either proposal, look for other options, or sell the loans at a loss and redeploy the capital. This case can be used as a background for teaching corporate debt securitization, corporate debt restructuring, and the role of creditors that face different institutional constraints.