Term Loan Lenders' Suit Claiming Breach of the Covenant of Good Faith and Fair Dealing Moves Forward

King & Spalding represents an ad hoc group of term loan lenders (lenders of the life-stye company Boardriders), who claimed that they were improperly and negatively impacted by a roll-up transaction done in “secret” by Boardriders and certain other lenders. The terms of the 2020 financing call for its creditors to get repaid before the existing loans, which the ad hoc group claims is unfair.  On October 17, 2022, New York Supreme Court Justice Andrea Masley issued her ruling, denying Boardriders’ motion to dismiss the breach of contract and the breach of good faith and fair dealing claims, allowing the lawsuit to move forward. The ruling reinforces the ad hoc group of term loan lenders’ stance that Boardriders’ recent financing should not allow its new investors to be given preferential treatment by being skipped to the front of the line in order to be compensated first.