Trident lender agent says Capital Finance breached intercreditor deal

By Caroline Salls

Pittsburgh, May 30 – Trident Holding Co., LLC lender agent Silver Point Finance, LLC and lender SPCP Group LLC filed a lawsuit Wednesday against Capital Finance Opportunities 1701C, LLC, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

Silver Point said SPCP in April 2018 supplied the capital necessary to recapitalize Trident and provide it with an opportunity for an operational turnaround. As a result of that recapitalization, Silver Point said “Trident avoided certain bankruptcy and was able to continue operations.”

In exchange for providing capital to fund Trident’s operations and repay a portion of its existing debt, the complaint said SPCP received claims against Trident and liens on its property that are senior to the claims and liens of the company’s s pre-existing creditors.

“Every one of Trident’s existing first-lien lenders – including CFO – expressly consented to the April 2018 transaction,” the lawsuit said.

Silver Point said the transaction also provided the existing first-lien lenders with repayment of roughly 19% of their outstanding loans at par.

As a part of the April 2018 transaction, and in exchange for these benefits, Silver Point said the first-lien lenders directed agent Cortland Capital Market Services LLC to execute an intercreditor agreement that established the priority of the SPCP’s liens, claims and payment entitlements and restricted the first-lien lenders’ prospective rights either to challenge or threaten to challenge the validity or enforceability of SPCP’s liens and claims or to oppose post-bankruptcy funding supported by the SPCP.

Despite this agreement, Silver Point said Capital Finance filed a complaint on May 22 “advancing both direct claims against the priority lender and priority agent and derivative claims on behalf of Trident’s estate.”

“The challenge is a transparent attempt by CFO to frustrate and delay the Chapter 11 cases and to extract value to which it is not entitled from the priority lender,” Silver Point and SPCP said in Wednesday’s lawsuit.

As a result, the plaintiffs said Capital Finance is in breach of the intercreditor agreement.

In its May 22 complaint, Silver Point said Capital Finance brought six causes of action challenging the validity both of the April 2018 transaction and of SPCP’s liens and claims arising out of that transaction and sought a ruling “setting aside the intercreditor agreement.”

The Silver Point entities said Capital Finance’s complaint also sought “avoidance of the April 2018 transaction as an actual fraudulent transfer” and equitable subordination of SPCP’s liens to those of Capital Finance.

Through their lawsuit, Silver Point and SPCP said they are asking the court to rule that the intercreditor agreement and the first-lien credit agreement are valid and enforceable and that Capital Finance has breached its obligations under those agreements.

The plaintiffs are also asking the court to order Capital Finance to comply with its obligations under the intercreditor and first-lien credit agreements and award damages, attorneys’ fees and costs.

Trident is a Sparks, Md.-based diagnostic health care provider. The company filed bankruptcy on Feb. 10 under Chapter 11 case number 19-10384.

© 2015 Prospect News.
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