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ARTICLE · 14 JANUARY 2025

Serta - Fifth Circuit Decision

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On December 31, 2024, the U.S. Court of Appeals for the Fifth Circuit issued its long-awaited decision regarding the permissibility of the Serta Simmons Bedding (Serta) uptier liability management exercise...

United StatesInsolvency/Bankruptcy/Re-Structuring
Ira S. Dizengoff
Ira S. Dizengoff
Philip Dublin
Philip Dublin
Daniel I. Fisher
Daniel I. Fisher
Lacy M. Lawrence
Lacy M. Lawrence
Jaisohn Im
Jaisohn Im
Abid Qureshi
Abid Qureshi
Joseph L. Sorkin
Joseph L. Sorkin
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On December 31, 2024, the U.S. Court of Appeals for the Fifth Circuit issued its long-awaited decision regarding the permissibility of the Serta Simmons Bedding (Serta) uptier liability management exercise (the 2020 Uptier) and related issues arising from the confirmation of Serta's chapter 11 plan of reorganization. The decision is a substantial victory for the excluded lenders challenging the 2020 Uptier, with the Fifth Circuit holding that Serta's acquisition of loans from the participating lenders outside of the established secondary market for syndicated loans was not an "open market purchase" within the meaning of the applicable credit agreement. The Fifth Circuit also addressed challenges to an indemnity provision provided in the plan of reorganization for the benefit of the participating lenders, finding that the indemnity was improper, rejecting arguments that the appeal of the confirmation order was equitably moot, and excising the indemnity from the plan

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