Senior Lenders Sue Cengage Over $430M Withdrawal

Law360, Los Angeles (October 24, 2013, 6:25 PM ET) -- Cengage Learning Inc.'s senior lenders asked a New York bankruptcy judge Wednesday to create a trust to protect what remains of the $430 million the textbook publisher withdrew from its credit account just before it went under.

The first-lien lenders filed a complaint with U.S. Bankruptcy Judge Elizabeth S. Stong, saying Cengage had improperly drawn down its credit revolver, then invested the money in mutual funds that would pay unsecured creditors.

Cengage knew it was tumbling toward bankruptcy on March 15 when it pulled out the...
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