Trinseo’s excluded OpCo term lenders have launched an offensive in the Chapter 11 case, commencing an adversary proceeding challenging the chemical group’s prepetition LMEs, marking the first time that double-dip or pari plus structures are being challenged in a Chapter 11 proceeding, and objecting to the proposed DIP financing.
Challenges to prepetition LMEs
In a complaint filed by Gray Reed and Pallas Partners on 26 May in the US Bankruptcy Court for the Southern District of Texas, the excluded lenders allege that Trinseo’s 2023 and 2025 LMEs breached the company’s OpCo credit agreement, improperly stripped collateral from the operating company credit group and manufactured nearly $1.5bn of intercompany claims that should either be voided, recharacterized as equity or equitably subordinated. The group further argues that the transactions unlawfully transferred value to super HoldCo lenders, including Apollo, Angelo Gordon, Oaktree, and TPG, and left holders of more than $700m of first-lien term loans “virtually” wiped out under the proposed Chapter 11 plan.
The plaintiffs, including CastleKnight, ArrowMark-managed CLOs and ORIX-managed Signal PeakCLOS, said the challenged transactions enabled the group of super HoldCo lenders to position themselves to take control of the company through...
