When Alvaria pulled off an aggressive liability management exercise in 2024, the company’s years of financial distress seemed to be in the rearview mirror. Within a year, the software company was back in dire straits — and this time, a fight between two of its most powerful lenders turned ugly.
In a lawsuit filed in New York state court in February this year, Cerberus, a private capital firm managing about $70bn, accused hedge fund Nut Tree Capital Management of executing a “predatory” foreclosure strategy designed to strip the lender of millions of dollars in recovery rights. The two parties have agreed to a settlement, according to two people familiar with the matter, though the development has not yet appeared in court records.
The suit alleged Nut Tree deliberately strung Cerberus along through bad faith negotiations only to seize control of the company through a foreclosure. Cerberus called a $20m payment to sponsors ABRY Partners and Vector Capital “nothing more than a bribe,” while Nut Tree said it was standard compensation for advisory services over the next year and a half — and alleged that Cerberus sought special treatment for about 1% of Alvaria’s loans.
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