ExteNet Issuer, LLC has failed to make accrued interest payments due on July 27, 2026, for its Series 2024-1 and Series 2025-1 notes. This missed payment, combined with alleged cash control violations, constitutes events of default. Specifically, liens on certain cash accounts became unperfected, and collections were deposited into accounts not subject to control agreements or not held in the names of the obligors.
The servicer, Midland Loan Services, did not make advances to cover the missed interest, indicating they determined the amounts were not recoverable. There is no designated backup manager for these transactions. The occurrence of an event of default triggers a manager termination event, which would require the noteholders to direct Midland to select a replacement manager for ExteNet Systems, LLC.
Credit rating agency KBRA had previously placed the ratings for these notes on Watch Downgrade on June 19, 2026, due to the Manager's liquidity challenges. KBRA is actively seeking information regarding current cash management, collateral performance, and the potential for interest payments. Absent timely information and mitigating developments, significant downgrades are likely. Previously, ExteNet had warned in June 2026 that it faced an immediate liquidity issue and could run out of funds by June 25 without short-term relief from lenders.
