Out-Of-Court Restructuring Faces New Burdens In SDNY
Law360, New York (February 5, 2015, 10:55 AM EST) -- In a pair of recent decisions, the courts in the Southern District of New York held that the transactions eliminating parent guarantees in connection with out-of-court restructurings were impermissible under Section 316(b) of the Trust Indenture Act of 1939, as amended, because the elimination of such guarantees impaired the nonconsenting noteholders' right to receive payment. The first decision, Marblegate Asset Management et al. v. Education Management Corp., -- F. Supp. 3d --, No. 14 Civ. 8584, (S.D.N.Y. Dec. 30, 2014), was issued on Dec. 30, 2014, and the second decision, Meehancombs Global Opportunities Funds LP et al. v. Caesars Entertainment Corp. et al., -- F. Supp. 3d --, No. 14 Civ. 7091 (SAS) (S.D.N.Y. Jan. 15, 2015), was issued on Jan. 15, 2015....
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