When we last left off, Judge Peck (SDNY) was foiling Cyrus Select Opportunities’ efforts to oppose Ion Media’s chapter 11 plan, while in the Northern District of Texas, Judge Jernigan was putting the stops on Michigan Retirement Systems’ attempt to thwart Erickson Retirement Communities’ allocation of value to PNC Bank
Second lien lenders may now have a new hero – Judge Shelley Chapman (SDNY). The latest match pits junior and senior lenders against one another in Boston Generating’s chapter 11 sale process. On October 4, Judge Chapman ruled from the bench that the intercreditor agreement did not prevent second lien lenders, who are on the cusp of a recovery (unlike Ion Media), from voicing concerns with a sale process that may conclude with their getting no recovery. Finding no express provision such as the one found in the ABA model intercreditor agreement silencing second lien lenders on the issue, Judge Chapman commented that the first lien agent’s arguments “conflate silence with subordination.”
This was just a skirmish before the main battle as Judge Chapman limited her ruling on standing to objections to the bidding procedures. Judge Chapman has now set us up for quite the cliff hanger as she made it clear that her decision did not apply to standing to oppose a sale.