The Robertshaw lender-on-lender battle marches on to the US Court of Appeals for the Fifth Circuit as Invesco has now appealed the decision of the US District Court for the Southern District of Texas, which affirmed in full the bankruptcy court ruling keeping in place the economic impact of a contested 2023 LME, while limiting Invesco’s remedies to monetary damages.
The dispute began in New York state court, where minority lender Invesco challenged a liability management transaction put in place in December 2023 by Robertshaw, sponsor One Rock Capital Partners and Robertshaw’s majority lenders, including funds managed by Bain Capital, Canyon Capital Advisors and Eaton Vance. The transaction pushed Invesco and other excluded lenders out of their position as “required lenders” under the debt documents, injecting new capital into the structure and priming the debt held by Invesco and other lenders with incremental super-priority debt.
The dispute then moved to Robertshaw’s Chapter 11 bankruptcy case, with a day-one adversary proceeding filed by the debtor, One Rock and majority lenders who participated in the pre-petition LME. The adversary proceeding sought to halt the pre-petition litigation and attain a declaratory judgment from Judge Christoper Lopez of the US Bankruptcy Court for the Southern District of Texas on the validity of the transaction.
Judge Lopez issued a split decision, finding that the pre-petition LME was a breach of the credit agreement by the company only, but not the majority lenders who participated in the transaction. One Rock was also found not to have tortiously interfered in the contract, avoiding any liability. Judge Lopez limited the remedies to monetary damages only, declining to use equitable relief to unwind the transaction.
Invesco challenged this decision in an appeal with the US District Court for the Southern District of Texas, where Judge Keith Ellison affirmed Judge Lopez’s ruling in full in a 1 July memorandum opinion. Judge Ellison also rejected Robertshaw’s cross-appeal of Judge Lopez’s ruling that Robertshaw had breached the super-priority credit agreement by executing the transaction. That appeal was dismissed.
The Fifth Circuit appeal docket can be found here.
