Litigation Coverage: AMC Entertainment 1L Noteholders Sue Company Over Recent Debt Restructuring

Relevant Document: Complaint An ad hoc group of AMC Entertainment Holdings first lien noteholders has sued the company and junior notes agent GLAS Trust for violating the company’s intercreditor agreement in its recent drop-down transaction. The plaintiffs say that the “illegitimate” transaction improperly vaulted a “handful” of second lien noteholders to senior status in order to deprive the plaintiffs of their collateral rights to certain movie theater and intellectual property assets. The plaintiffs – which include Anchorage Capital, Carronade Capital and Deutsche Bank – filed the suit in New York state court on Sept. 17. The plaintiffs claim to collectively hold more than 50.1% of the face value of the first lien notes due in 2029. The plaintiffs say that although the company’s intercreditor agreement was “designed to prevent such foul play,” AMC and GLAS “tossed it aside” by executing a supplemental agreement with the favored holders of the company’s second lien notes due in 2026. However, the plaintiffs maintain there was “no basis” for doing so because a subset of parties to the intercreditor agreement “cannot unilaterally decide that it is of no further force” without obtaining consent from other parties, including the senior representative of the first lien[...]