By Michele Maman, Tom Curtin and Marc Veilleux (June 14, 2022, 4:53 p.m. EDT) — On April 13, the United States Court of Appeals for the Third Circuit ruled in CoFund II LLC v. Hitachi Capital America Corp. that a junior creditor breached a rotation clause in an intercreditor agreement when it enforced a senior creditor’s security to satisfy the junior creditor’s claims before the senior creditor’s claims had been fully paid.
The Third Circuit also upheld a judgment that awarded damages to the primary creditor for the misuse of these collateral products in violation of the turnover provision of the intercreditor agreement.
The Hitachi decision serves as a useful reminder to junior creditors and senior creditors alike, because…
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