Minority Lenders Defeat Motions To Dismiss By Boardriders and Majority Lenders; Lawsuit Can Go Forward

On behalf of an ad hoc group of minority term loan lenders, King & Spalding successfully defeated motions to dismiss the complaints brought by them in the Commercial Division of the New York Supreme Court.  In the ruling, the Court found that the ad hoc group’s lawsuit against life-style company Boardriders challenging the uptier and priming financing transaction Boardriders consummated in 2020 can move forward. The terms of the 2020 financing transaction subordinated the term loans held by minority lenders to the term loans held by the majority lenders, as well as the new financing funded by such majority lenders.  The ad hoc group’s lawsuit asserts that such transaction was in breach of the existing credit agreement and violated the implied covenant of good faith and fair dealing under New York law.