Milbank LLP Global Leveraged Finance partner Benjamin Sayagh and associate Katie Forer co-authored “Debt Buybacks, Serta Case and Market Reactions” in the International Law Office Banking & Financial Services newsletter, published by Lexology.
In the article, the authors discuss the Federal Bankruptcy Court’s ruling in Serta Simmons Bedding, LLC, et al (“Serta”) and the history of loan buybacks. The court issued a ruling finding that "open market purchases" conducted by the company were permissible under its loan agreements. Open market purchases, or loan buyback provisions, are commonly included in broadly syndicated loan agreements and news of the Bankruptcy Court's ruling in Serta has been widely followed by the loan market. As of July 17, 2023, the decision remains on appeal with the Court of Appeals for the Fifth Circuit. This article covers the history of loan buyback provisions, the recent Serta decision and the meaning of “open market” repurchases.
