The agreement, which has yet to be finalized, will see lenders take full ownership of Pluralsight through a debt-for-equity swap. The group includes Blue Owl Capital, Ares Management, BlackRock, Goldman Sachs, Golub Capital, Oaktree Capital Management, Benefit Street Partners, and Guggenheim Partners.

Vista acquired Pluralsight for $3.5 billion in 2021 and subsequently merged the business with competing tech learning platform A Cloud Guru. Debt financing for the initial transaction was provided via a $1.175 billion recurring revenue term loan (and $100 million revolver) that allowed for higher-than-normal leverage relative to traditional EBITDA-based financing.

Alongside the purchase at peak valuation, the pandemic also proved to be a high water mark for sales of the technology upskilling courses and certificates that Pluralsight offered. Topline growth turned negative just as rate hikes picked up—a similar story to peers like 2U, which filed for Chapter 11 last week, and Byju's, whose insolvency proceedings were halted this morning after the company reached a last-minute settlement deal.

Pluralsight’s own deal is expected to eliminate around $1.3 billion, or 75 percent, of the company’s debt. Lenders will also provide around $250 million in additional capital.

Vista first approached lenders in early 2023 with a request to loosen covenants as it provided $75 million in new equity to shore up Pluralsight’s cash position. The firm later warned its investors to expect "liquidity challenges" at Pluralsight in the first half of 2024 and also funded a separate $163 million subscription line facility for the business.

The firm eventually marked down the value of its stake to zero and began discussions with lenders in March over a potential restructuring, hiring Ducera Partners and Kirkland & Ellis as advisors.

In June, Vista completed a new preferred equity financing that involved a drop-down transaction in which Pluralsight's intellectual property was transferred to an unrestricted subsidiary (out of creditors' reach).

Vista, which has historically been less aggressive with liability management than some of its peers, may have damaged relationships with lenders as a result—the Financial Times quoted sources close to the deal who said the aftermath of the maneuver forced Vista into "damage control" as it tried to patch things up with lenders. The FT also quoted a lender who said that certain creditors were "apoplectic,” even as observers agreed that Vista was well within its rights laid out in the credit agreement.

Kip deVeer, CEO of Ares Capital Corporation and head of Ares Credit Group, suggested this week that previous coverage of events may have been overblown.

"So look, what I’d say is most of what’s been reported in the press is not accurate. So I think that’s important to just put out there," deVeer told analysts on an earnings call. "When we really drill through and look at who are the biggest sponsors in the portfolio, they’re obviously sponsors that we do a tremendous amount of business with and that we have a lot of confidence in. Vista is one of them."

Avoidance of such liability management transactions, however, is top of mind at Ares.

"We spend a tremendous amount of time just because of the experience we have in the market thinking about, frankly, documentations,” deVeer added. “The way that we come into transactions, we like to lead our own deals, we like to write documents, we like to structure covenants because we've been doing this a long time … Over the last 12 to 18 months, we probably passed on deals more often on the documentation than any other reason for passing on a deal."

When things do go south, DeVeer said Ares has no problem stepping in. “Unfortunately, for Visa Equity Partners, it’s not going to be a situation that works out very well for them.”