Diminution in Value Claim as a Backdoor Plan Block & Other Lessons from Intercreditor Litigation

This article analyzes the intercreditor litigation that unfolded in the In re Franchise Group, Inc. Chapter 11 case and shows how junior lenders wielded a superpriority adequate protection administrative expense claim to effectively block confirmation of a plan, underscoring the leverage such claims can create in plan negotiations. It analyzes practical drafting takeaways for senior and junior lenders to mitigate similar conflicts in future cases and to better navigate diminution-in-value disputes under intercreditor agreements.