Recently, in Kurak v. Dura Automotive Sys., Inc., the United States Bankruptcy Court for the District of Delaware enforced subordination provisions against certain out-of-the-money subordinated noteholders.
DE Bankruptcy Court Enforces 'X-Clause'
Recently, the United States Bankruptcy Court for the District of Delaware enforced subordination provisions against certain out-of-the-money subordinated noteholders. The latter had asserted that the so-called 'x-clause' in the indenture provided them with a right to recovery under the plan of reorganization despite the fact that the senior noteholders would not be paid in full. The decision is significant for several reasons ...
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