Justice Barbara Jaffe

 

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Based on defendants’ conduct in a bankruptcy proceeding auction, plaintiffs asserted contract and other claims against them. Plaintiffs claimed that an agent breached a credit agreement and security agreement by following the instructions of the required banks to submit an inflated credit bid that was neither reasonable nor for the benefit of the secured creditors, and that the agent should have joined with other bidders to avoid harm to the secured creditors. Plaintiffs alleged that the agent agreed to submit credit bids in connection with the asset purchase agreements that extinguished the lenders’ $257 million claim, but took no steps to ensure that plaintiffs would receive their ratable share of the collateral, which was part of a strategy to siphon collateral to the agent’s affiliates and avoid the credit agreements’ pro rata sharing provisions. Plaintiffs maintained that by releasing the liens on the collateral in the security agreement in this manner, the agent purported to effectuate a waiver under credit agreement § 14.12, to which plaintiffs did not consent, thereby breaching that provision. The court, among other things, found the existence of unresolved factual issues as to whether the agent breached the agreements, or is immune from liability.