But who is making these loans to companies that will be obviously unable to meet their payments? I never saw that part in the PE-sinks-companies story properly explained.
The article makes it seem super obvious that these deals won't work out. But that is actually not the case. Many / most PE deals actually do work out, and end up making the sponsors a lot of money.
And why would banks allow this? Because private equity are huge profit drivers. They use lots of debt. They also acquire many companies, so there is an ongoing relationship.