In their article published in the Journal of Bankruptcy Law titled, "Southern District of Texas Bankruptcy Court Finds LME Transactions Violated Credit Agreement, But Limits Recovery to Potential Claim in Robertshaw Litigation," Schulte Roth & Zabel partner Doug Mintz, special counsel Peter Amend and associate Robert Brown discuss a bankruptcy court decision holding that a prepayment of a term loan debt violated the plain terms of the credit agreement.
Bankruptcy Judge Christopher Lopez of the US Bankruptcy Court for the Southern District of Texas has issued a highly anticipated decision rejecting one lender's (Lender Defendant) request to void a prepayment made by the borrower, Robertshaw, to Lender Defendant in December 2023. In the decision, Bankruptcy Judge Lopez addressed a narrow contractual dispute centered around a series of liability management transactions conducted by Robertshaw and certain of its secured lenders (Lender Plaintiffs) to the exclusion of the Lender Defendant. Bankruptcy Judge Lopez found that a prepayment of term loan debt violated the plain terms of the credit agreement, but that the other transactions should stand and Lender Defendant's sole remedy is a claim against Robertshaw for breach of contract.
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