On certified appeal, the US Court of Appeals for the Fifth Circuit reversed the bankruptcy court and struck down the debtor’s prepetition uptier transaction as impermissible, holding that the debtor’s private engagement with individual lenders for a debt buyback did not constitute an open market purchase on a secondary market in violation of the ratable sharing provisions of the debtor’s credit agreements. This ruling significantly impacts borrowers’ abilities to use liability management transactions financially restructure outside of Chapter 11.
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In re Serta Simmons Bedding, L.L.C.: Fifth Circuit Rejects Debtor's Uptier Transaction
