Pryor Cashman Achieves Victory For Wilmington Savings Fund Society, FSB, in Delaware Chancery Court Litigation Involving $600 Million in Bond Debt
Pryor Cashman has achieved a major victory on behalf of its client Wilmington Savings Fund Society, FSB, in its litigation against Foresight Energy LLC. On December 4, 2015, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery ruled that the company breached an indenture by failing to redeem bondholder notes. Seth H. Lieberman and Patrick Sibley, members of the firm’s Bankruptcy, Reorganization and Creditors’ Rights group, spearheaded the representation.
In 2013, Foresight Energy LLC and Foresight Energy Finance Corp. issued bonds worth approximately $600 million for which Wilmington Savings Fund Society, FSB now acts as indenture trustee. The indenture contained a “change of control provision” stating that if a third party acquires control of the company, as is often the case in an acquisition, the new controlling party must repurchase the bonds at a premium. When Murray Energy acquired Foresight in April 2015, it created one of the leading coal companies in the world, and that acquisition also allegedly triggered the change of control provision in the indenture. Wilmington Savings Fund Society, FSB sought a declaration that the deal triggered the change of control provision and damages for breach of contract.
In his opinion issued on December 4, 2015, Vice Chancellor J. Travis Laster agreed with the trustee’s motion by Wilmington Savings Fund Society, FSB, that the defendants breached the indenture by failing to redeem the notes. The decision also awarded recovery of the Trustee‘s attorneys‘ fees and expenses.
For Pryor Cashman’s Lieberman and Sibley, this engagement is the latest in a long line of work on behalf of indenture trustees. They represented an indenture trustee to more than $155 million in unsecured notes in the AMR bankruptcy—the last of the remaining legacy airlines in the U.S. to file for bankruptcy. They also represented an indenture trustee to the second lien notes in the Momentive bankruptcy, which was one of the largest and widely reported bankruptcies in 2014. Most recently, they were retained to represent an indenture trustee for $479 million in senior unsecured notes in connection with the Caesars Entertainment Operating Company bankruptcy, which is widely regarded as one of the largest modern day bankruptcies.
To read the decision, please click here. The victory was covered in the Law 360 article "Foresight Energy Evaded Dues on $606M Notes, Judge Says" on December 7, 2015. To read the article, please click here.
