You are here: / / THE PROCEEDS OF THE SALE OF COLLATERAL TO THE MAJORITY LENDERS WERE NOT...
, ,

THE PROCEEDS OF THE SALE OF COLLATERAL TO THE MAJORITY LENDERS WERE NOT DISTRIBUTED TO THE MINORITY LENDERS IN THE MANNER REQUIRED BY THE CREDIT AND SECURITY AGREEMENTS IN THIS PRIVATE FORECLOSURE; THE MINORITY LENDERS’ BREACH OF CONTRACT CAUSES OF ACTION SHOULD NOT HAVE BEEN DISMISSED (FIRST DEPT).

The First Department, reversing Supreme Court, in a full-fledged opinion by Justice Renwick, determined the breach of contract claims by the minority lenders against the majority lenders and a collateral agent should not have been dismissed. Collateral was sold to the majority lenders but the proceeds were not distributed to the minority lenders in the manner required by the credit and security agreements. The opinion is fact-specific and far too complex to fairly summarize here:

… [T]he pro rata sharing provisions required that all minority lenders receive pro rata treatment of their debt obligations, which meant that the proceeds of the sale of the collateral (notes and equity) should have been distributed to all secured lenders pro rata in accordance with the terms of the credit agreement. … While the Collateral Agent, as directed by the majority lenders, was authorized to define the terms, conditions, and limitations of how the restructuring sale should be carried out, the reorganization had to be for the pro rata benefit of all those holders of secured debt, including minority lenders. Thus, the minority lenders have the right to object to the restructure sale conducted through credit bidding based upon the failure to provide them adequate protection of their pro rata interest on the foreclosed collateral. AEA Middle Mkt. Debt Funding LLC v Marblegate Asset Mgt., LLC, 2023 NY Slip Op 01157, First Dept 3-7-23

Practice Point: This comprehensive opinion concerns a private foreclosure of collateral and the distribution of the proceeds to the majority and minority lenders pursuant to complex credit and security agreements.

 

You might also like
Landlord Properly Granted Summary Judgment in Action Stemming from an Assault on Landlord’s Premises—Plaintiff Unable to Raise a Question of Fact Whether the Assailants Were Intruders, as Opposed to Tenants or Invitees
DEFENDANT’S MENTAL ILLNESS WARRANTED REDUCING DEFENDANT’S SENTENCE FOR ROBBERY TO THE MINIMUM, STRONG DISSENT (FIRST DEPT).
APPLICATION FOR LATE NOTICE OF CLAIM SHOULD HAVE BEEN GRANTED, DESPITE ABSENCE OF REASONABLE EXCUSE AND NOTICE BY OTHER MEANS; PURPOSE OF NOTICE OF CLAIM REQUIREMENT EXPLAINED.
PLANKS AND CRIBBING COVERING AN OPENING WERE SAFETY DEVICES WITHIN THE MEANING OF LABOR LAW 240 (1), FAILURE TO SECURE THE CRIBBING WAS A PROXIMATE CAUSE OF THE ACCIDENT (FIRST DEPT).
DEPARTMENT OF HEALTH EXECUTIVE-COMPENSATION-CAP AND CONFLICT-OF-INTEREST RULES FOR AGENCIES PROVIDING SERVICES TO DEVELOPMENTALLY DISABLED CHILDREN DO NOT VIOLATE THE SEPARATION OF POWERS DOCTRINE.
UNAMBIGUOUS TERMS OF POLICY REQUIRED A WRITTEN CONTRACT WITH ANY ADDITIONAL INSURED; THE ABSENCE OF A WRITTEN CONTRACT DIRECTLY WITH THE ADDITIONAL INSURED PRECLUDED COVERAGE, DESPITE A WRITTEN AGREEMENT WITH A THIRD PARTY TO PROVIDE COVERAGE FOR THE ADDITIONAL INSURED.
Derivative-Shareholder-Claim Versus Direct-Individual-Claim Explained/Out-of-Pocket Damages Rule for Fraud and Negligent Misrepresentation Claims Briefly Discussed
THE CORRECTION LAW REQUIRING A SEX OFFENDER TO VERIFY HIS OR HER ADDRESS EVERY NINETY DAYS IS VOID FOR VAGUENESS AS APPLIED TO HOMELESS SEX OFFENDERS (FIRST DEPT). ​

Categories

Sign Up for the Mailing List to Be Notified When the Site Is Updated.

  • This field is for validation purposes and should be left unchanged.

Copyright © 2025 New York Appellate Digest, Inc.
Site by CurlyHost | Privacy Policy

THE HANDWRITTEN ADDITION TO THE PRINTED CONTRACT IS PRESUMED TO EXPRESS THE... A VIDEO CAMERA HAD BEEN INSTALLED IN A GRAPEFRUIT-SIZED HOLE BEHIND A TOILET...