In so ruling, the Second Circuit considered the issue arising in the recent Southern District of New York District Court decisions in Marblegate (Marblegate Asset Management v. Education Management Corp., 75 F.Supp.3d 592 (S.D.N.Y. 2014) (Marblegate I); Marblegate Asset Management, LLC v. Education Management Corp., 111 F.Supp.3d 542 (S.D.N.Y. 2015) (Marblegate II)), and two cases relating to Caesars Entertainment (BOKF, N.A. v. Caesars Entertainment Corp., 144 F.Supp.3d 459 (S.D.N.Y. 2015); MeehanCombs Glob. Credit Opportunities Funds, LP v. Caesars Entm’t Corp., 80 F.Supp.3d 507 (S.D.N.Y. 2015) (collectively, BOKF/MeenhanCombs)), as to when an out-of-court debt restructuring may violate Section 316(b) of the TIA.
Some, but not all, of the cases before and after them that have dealt with the issue have treated Section 316(b) as providing a narrow and specific protection for noteholders: requiring noteholder unanimity to alter the legal right to repayment under the terms of an indenture and the right to sue to enforce that right, but not protecting the practical right to receive payment.
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