What’s Next on Serta's Uptiering Decision: Impact on Reorganization Strategy, Confirmation, and Equitable Mootness
A live 90-minute CLE video webinar with interactive Q&A
This CLE webinar will analyze the implications arising out of the Fifth Circuit's decision in Excluded Lenders v. Serta Simmons Bedding L.L.C. (In re Serta Simmons Bedding L.L.C.), Case No. 23-20181 (5th Cir. Dec. 31, 2024), revised (Feb. 14, 2025), and its impact on Chapter 11 reorganization strategy, confirmation, and the equitable mootness doctrine. The panel will also discuss success factors when challenging these types of transactions and whether this decision will curtail uptier and other similar transactions.
Outline
- Overview
- Purposes of liability management transactions
- Loan terms and conditions that make liability management transactions possible and desirable
- Lender responses and blocking mechanisms
- Analysis of the Serta decision
- Preserving "sacred" lender rights to pro rata payment
- Invalidating the plan's indemnity
- The merits of excising the indemnity
- §502(e)(1)(B)
- Equal treatment
- Equitable mootness argument
- Takeaways and planning for what's next
- Weighing benefits and risks of uptiering after Serta
- Literal actual cost in fees, etc. of the failed transaction
- Future litigation and liability
- Impact on equitable mootness
- Creditor strategies and "Serta blockers"
- Scope of impact on other transactions
- Contrasted with Mitel Networks (Ocean Trails CLO VII v. MLN Topco Ltd., Case No. 2024-00169 (N.Y. App. Div., 1st Dep't, Dec. 31, 2024))
- Weighing benefits and risks of uptiering after Serta
Benefits
The panel will review these and other key issues:
- What is the open market purchase exception to non-pro rata uptier transactions?
- Does the decision put a chink in equitable mootness?
- What protections and drafting strategies should minority lenders insist upon?
- What will emerge as the generally accepted syndication market response to Serta?
- Will Serta be used to attack transactions using differently worded documents if the net effect is the same?
Faculty
Gianfranco Finizio
Partner
Lowenstein Sandler
Mr. Finizio focuses his practice on bankruptcy and insolvency matters. He represents a diverse range of clients... | Read More
Mr. Finizio focuses his practice on bankruptcy and insolvency matters. He represents a diverse range of clients including official committees of unsecured creditors, indenture trustees, debtors, bank agents, and other major secured and unsecured creditors in complex Chapter 11 bankruptcy cases, out-of-court restructurings, and other distressed situations. Mr. Finizio has extensive experience with representing parties in Chapter 11 cases in the pharmaceutical, healthcare, and retail industries, to name a few. He frequently publishes articles on insolvency issues and presents at industry conferences, discussing emerging issues on bankruptcy-specific topics. Mr. Finizio was listed in the 2021, 2022 and 2023 editions of Chambers USA: America’s Leading Lawyers for Business in the area of Bankruptcy/Restructuring. He was recognized in 2023 as a “Rising Star” by American Lawyer’s New York Law Journal. Mr. Finizio was also honored by the American Bankruptcy Institute (ABI) in 2022 as one of its "40 Under 40" Emerging Leaders for his Insolvency Practice.
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Kelly E. Moynihan
Counsel
Lowenstein Sandler
Ms. Moynihan focuses her practice on bankruptcy and insolvency matters. She represents official committees of... | Read More
Ms. Moynihan focuses her practice on bankruptcy and insolvency matters. She represents official committees of unsecured creditors, indenture trustees, liquidating trustees, trade creditors, secured lenders, debtors, and other significant parties-in-interest in complex reorganizations and financially distressed situations. Ms. Moynihan served as a law clerk to the Hon. Louis A. Scarcella in the U.S. Bankruptcy Court for the Eastern District of New York.
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Richard (Rich) Newman
Managing Director
Alvarez & Marsal
Mr. Newman is a Managing Director with Alvarez & Marsal’s Credit Advisory in Chicago. He Co-leads... | Read More
Mr. Newman is a Managing Director with Alvarez & Marsal’s Credit Advisory in Chicago. He Co-leads Alvarez & Marsal’s Unsecured Creditors’ Committee practice and provides financial advisory services to creditors, focusing on representing official committees of unsecured creditors in bankruptcy proceedings. With more than eighteen years of restructuring experience, Mr. Newman has advised unsecured creditor committees, healthy and distressed companies in leveraged recapitalizations, mergers and acquisitions, and support of interim management roles. He specializes in 363 sales, best interests test, liquidity management, business plan review, solvency, formulation of reorganization plans and litigation support.
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Conrad Ragan
Director
Alvarez & Marsal
Mr. Ragan is a Director with Alvarez & Marsal’s North American Commercial Restructuring practice, where he... | Read More
Mr. Ragan is a Director with Alvarez & Marsal’s North American Commercial Restructuring practice, where he specializes in representing official committees of unsecured creditors in bankruptcy proceedings with a focus on implementing strategies to maximize creditor recoveries, the development and evaluation of financial models, business reviews and stakeholder negotiations. He brings 20 years of corporate credit and lending experience in both large corporate and large financial institutions. Prior to Joining A&M, Mr. Ragan spent more than 10 years as a Director with PepsiCo, where he led PepsiCo’s corporate credit risk management team. There, Mr. Ragan's group was responsible for end-to-end North America corporate credit risk, comprised of a $70 billion annual portfolio with 200 thousand customers across all PepsiCo business lines, including the ownership of sector bad debt reserves (CECL). Additionally, he led supply chain risk covering all suppliers globally, encompassing $40 billion in annual spend. At PepsiCo he regularly led multimillion dollar strategic finance actions, including M&A, contract negotiations, bankruptcy / insolvency management, CAPEX committee, Audit committee, and policy writing. Mr. Ragan graduated cum laude from North Carolina State University’s College of Management with a bachelor’s degree in Business Management and a minor in Economics. Additionally, he has a Master of Business Administration from Wake Forest University where he was Dean’s Scholar.
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