On January 25, 2024, a New York trial court dismissed a claim brought by one lender/participant in a $200 million syndicated loan against the borrower, other lenders, and the loan originator and servicer. The plaintiff alleged the borrower defaulted by failing to provide audited financial statements as required by the loan agreement and that the other defendants failed to protect the plaintiff’s interests or improperly waived the default through an amendment to the loan agreement executed without the plaintiff-lender’s knowledge or consent.

The court held that the amendment in question was properly executed and authorized by “required lenders” (i.e., those holding more than 50% of the loan commitments), and thus, the waivers of the defaults contained in the amendment were valid. As the co-lender/plaintiff voluntarily entered into the loan agreement fully aware of the possibility that an amendment could waive its rights, the court dismissed the plaintiff’s contract and ancillary good faith claims. The court also denied the co-lender’s motion to amend its complaint to add a claim for injunctive relief because it did not allege that the defendants were taking action contrary to the loan agreement.

This case is Arena Vantage SPV, LLC v. CoVenture-Vantage Credit Opportunities GP, No. 654994/2022 (N.Y. Sup. Ct. Jan. 26, 2024).The plaintiff is represented by Paul Hastings LLP. The defendants are represented by Seward & Kissel LLP. The opinion is available here.