Private equity companies add AI-disruption clauses to buyout loan agreements

Private equity firms like H.I.G. Capital are incorporating AI-disruption force majeure clauses in buyout loan agreements, allowing companies to delay default consequences if AI impacts their business. This novel clause, appearing in at least two leveraged buyouts since September, extends traditional protections to cover AI-related disruptions alongside events like pandemics and wars. Creditors express concern that such provisions could weaken lender protections by enabling indefinite deferrals.