Lenders’ Guide to Priming Exploitation
August 7, 2024
For the past several years, we have seen an increase in liquidity and liability management transactions that have stretched credit documentation and attracted significant litigation. Whether it’s sponsors and companies looking to preserve their ownership interests, or investors looking to leverage a temporary crisis to improve their loan position, these transactions have attracted substantial attention and scrutiny in the courts and the market. A cross-disciplinary team of finance, restructuring, and litigation attorneys at O’Melveny have been following this trend closely and have to put together a Priming Transaction Tracker to continue monitoring new developments. We also highlight below the numerous articles and alerts we have published on this topic, which will continue to be updated as new deals get announced, new lawsuits get filed, market practices evolve, and new judicial decisions clarify this fluid area of the law.
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Prior Client Alerts:
- Priming Transactions Update: Boardriders
- Priming Transactions Update: TPC Group Inc.
- Bankruptcy Court Ruling Imposes Lender Liability
- New York Court’s Ruling Could Have Broader Implications for No-Action Clauses
- Priming Transactions Update: Don’t Sleep on Serta
- The Cramdown Podcast: Lender On Lender Priming
- Predatory Priming: How Can Investors Protect Their Priority?
- COVID-19: Prime Time for Priming
Deal Tracker:
| Deal | Provision at Issue | Status |
| Mitel |
|
Lawsuit pending, case removed to federal court |
| Murray Energy |
|
Lawsuit dismissed |
| Boardriders |
|
Claims survived motions to dismiss, but lawsuit settled after acquisition |
| Serta |
|
Filed for bankruptcy, claims dismissed by bankruptcy court on summary judgment; appeal to Fifth Circuit pending |
| TPC Group |
|
Bankruptcy court ruled against minority lenders |
| Incora |
|
Trial held; Bankruptcy court ruled in favor of the excluded lenders to unwind the uptiering transaction |
| TriMark |
|
Settled after certain claims survived motion to dismiss |
| J. Crew |
|
Settled after J. Crew sought declaratory judgment that proposed transaction did not violate credit agreement |
| PetSmart/Chewy |
|
Settled after PetSmart filed a lawsuit alleging Citibank failed to release collateral in accordance with the terms of the loan documents |
| Neiman Marcus |
|
Settled after lawsuit was filed |
| Travelport |
|
Settled after lawsuit was filed |
| Cirque du Soleil |
|
Not challenged |
| Revlon |
|
Lawsuit dismissed |
| Robertshaw |
|
Trial held; Bankruptcy court ruled lenders did not breach contract or implied covenant, but company breached credit agreement; transaction not unwound; priority and amount of damages claim remains pending |
This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Jennifer Taylor, an O’Melveny partner licensed to practice law in California; Jeff Norton, an O’Melveny partner licensed to practice law in New York; and Lauren M. Wagner, an O'Melveny counsel licensed to practice law in New York, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.
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