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Abstract: 

With increasing regularity, majority debtholders in distressed financings are attempting to leverage their rights under their loan documents to secure certain benefits and opportunities for themselves at the expense of the minority holders; and while minority holders have attempted to challenge such acts, they’ve largely been unsuccessful. This issue has garnered significant attention due to the recent proliferation of “up-tier transactions,” and in this article the authors describe other scenarios where majority lender groups have taken such actions at the expense of minority holders and how courts in various jurisdictions have resolved challenges to such transactions.

Keywords: In re Peabody Energy Corp.; In re LATAM Airlines Group S.A.; Selective DIP Roll-Ups; In re J.C. Penney Company, Inc.; In re Town Sports International, LLC

Affiliations:  1: Debevoise & Plimpton LLP; 2: Debevoise.