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Serta Simmons has foiled efforts by Apollo Global Management, which is run by billionaire Leon Black, to stop a controversial debt restructuring in a precedent-setting move that could roil the debt markets. New York State Supreme Court Judge Andrea Masley ruled over the weekend the mattress seller could move forward on a plan to restructure $1.95 billion …
Serta Simmons has foiled efforts by Apollo Global Management, which is run by billionaire Leon Black, to stop a controversial debt restructuring in a precedent-setting move that could roil the debt markets.
New York State Supreme Court Judge Andrea Masley ruled over the weekend the mattress seller could move forward on a plan to restructure $1.95 billion of senior debt by creating new loans that would be paid off in a bankruptcy ahead of existing senior lenders, including Apollo, which owns roughly one-third of the debt.
Apollo and hedge fund Angelo Gordon sued Serta Simmons and its private equity owner Advent International over the plan, citing the downgrading of their debt status. They had requested the judge issue a temporary restraining order to prevent the deal from closing. Masley ruled against an injunction.
She could still rule in Apollo’s favor at trial, but indicated that she may not. “As to breach of contract at this juncture, the court cannot find likelihood of success,” she said in the ruling.
Serta Simmons’ efforts to skirt its senior lenders could change the risks of investing in corporate loans, experts said.
“Usually, the agreement is, if you are senior you are the top of the heap,” Stephen Lubben, a Seton Hall professor and restructuring expert, told The Post. “I think if they can get this [restructuring] through on a majority vote, you’ll see a lot of borrowers thinking about how they can restructure their debt.”
Lubben cited one previous occasion during which a minority of senior lenders disagreed with a refinancing plan but it was forced through. In 2009, a bankrupt Chrysler sold itself in a deal in which United Auto Workers, the junior lenders, got a 55-percent stake in the new company.
The objecting party, the Indiana State Police Pension, owned 2 percent of Chrysler’s senior loans, while in the Serta Simmons case, the Apollo-led group owns 33 percent of the company.
