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Excluded lenders won $161.5 million
The ratable treatment clause
The credit agreement contained a section requiring ratable treatment. A lender that received a disproportionate payment on its loans had to buy participations in the loans of those who received nothing, which spreads the payout until everyone is treated the same. The judge found the 2020 payments breached that section, so the $734 million that went to roughly 53% of the term lenders had to be shared, leaving every lender with roughly 39 to 40 cents as of 2020.
How interest built the award
Interest made up a large part of the award. New York's statutory rate is 9%, simple and not compounded, and it ran from 2020 until the judgment. If every excluded lender had joined the case, the damages would have come to about $400 million, and the group that sued held about 80% of that.
Settlements and the final number
Roughly a third of the defendants settled over the Fourth of July weekend and were carved out of the decision. After that and other adjustments, the judgment for the excluded lenders came to about $161.5 million.
How does a ratable sharing clause work?
A sharing clause in a syndicated loan says that every lender in a class should receive the same proportion of what the borrower pays on that class. If one lender receives more than its share, it must buy participations in the loans of the others, which passes part of the extra payment along. The result is that all lenders end up with the same recovery percentage. The clause exists because the lenders all lent to one borrower under one agreement.
Why do courts add interest to damages?
Interest on a damages award compensates for the time the money was unavailable, since a payment received in 2026 is worth less than the same payment would have been in 2020. New York's civil practice law lets a winning party recover interest on contract damages as a matter of right. The statutory rate for most judgments is 9% per year. Because it is simple interest, it accrues on the original amount only and not on earlier interest.
What happens to a judgment when defendants settle?
A defendant that settles is released from the claims and is dropped from the final judgment. The case continues against the remaining defendants, and the damages are recalculated to cover only their share. Settlements reached before a ruling also remove the risk of an adverse finding for those parties. As a result, a judgment can be much smaller than the total harm alleged at the start of a case.
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