Many had expected the Serta ruling to “be the final nail in the coffin for non-pro rata liability-management exercises (LMEs),” but, as the Glenn Agre attorneys noted, “this hope was short-lived.” Borrowers quickly developed new structures, like amend-and-extend provisions, to continue non-pro rata exchanges.
Court decisions have been inconsistent. Some “rejected attempts to exploit technicalities in the loan documents,” while in other decisions, the courts “took a more literal approach and upheld the LME structures at issue.”
The article included an exhibit that summarized how courts have ruled on recent LME disputes, highlighting the key deal terms at issue and whether the structure was rejected or upheld.
Read more in American Bankruptcy Institute Journal (subscription needed).
