Dividend Recapitalization (Like, Seriously, Why Not?)

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So, this isn't new territory for PETITION readers. We highlighted the dividend recap that came under fire in Payless Holdings. What ultimately happened? Well, a bunch of papers were filed under seal (and some reputations were, presumably, besmirched) and then a settlement. Because, of course. Why air out an issue that can have ramifications across various jurisdictions when you can just settle it and sweep the whole dispute under the rug? PETITION NOTE: For the uninitiated, and putting it simply, a dividend recap happens when a company issues debt and clogs up its balance sheet for the purpose of paying cash-money dividends to its private equity sponsor. It's been a feature of, like, virtually every private equity owned retail bankruptcy of the last year. Or at least the one's that have filed outside of Delaware, anyway. Why? Because capital markets, kids. Really? Yeah, and because of spreads. Spreads? Yeah, which happen to be narrow AF right now. But we digress. Anyway, stats: per LCD News, "[t]hus far in 2017, $15.31 billion of funds raised from sponsor-backed loans were earmarked for a distribution, nearly double the $7.77 billion in the same period a year ago and well ahead of the $10.24 billion in the first three quarters of 2015." Which, for the record, ain't a shabby number in and of itself. So, again, why not? Everyone's doing it? And getting away with it.