>> Lenders aren't dumb. They know the reputation of the PE performing the buyout. If that particular firm has a terrible track record money to lenders, the lender will want to be compensated for that risk.

That's not a bust out then. If the lenders get compensated for their risk it's just a business decision.

The accusation was "The company has a bunch of loans it will never be able to pay off (sucks for the lenders)".

The accusation was that the lenders were in fact dumb.

So which is it?