Clifford Chance

"LMEs" – A.K.A., Language Matters Exercises: Fifth Circuit Disagrees with Serta Bankruptcy Court’s Interpretation of “Open Market Purchases”

January 3, 2025

Fifth Circuit reverses Bankruptcy Court and holds that the 2020 uptier transaction was not a permissible “open market purchase” under an exception to the pro rata sharing provision of the applicable credit agreement because it did not take place on the secondary market for syndicated loans.

On the same day, the New York Supreme Court’s Appellate Division (First Department) held that the Mitel non pro rata uptier exchange did not violate the applicable credit agreement, in part, because the relevant provision allowing the borrower to “purchase” term loans did not preclude a refinancing or exchange of the existing debt.

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