Serta Simmons Bedding, LLC (“Serta”) is one of the most recent examples of a creative borrower using flexibility in its contractual credit terms to access new liquidity at the expense of its existing priority lenders. Serta is one of the largest mattress manufacturers and distributors in North America. With the agreement of a subset of its priority lenders, Serta successfully completed a debt swap that provided for the repayment of part of its existing priority debt in a discount and the issuance of new priority debt securities for lenders that chose to participate – thus offering non-participating lenders. Recognizing that this recapitalization would seriously infringe their priority rights, the non-participating lenders attempted to seek the conclusion of the transaction. The New York State Supreme Court dismissed the request for non-compliance and the transaction was quashed. In Serta`s case, dissenting lenders held about 30 per cent of Serta`s initial outstanding amount of $2 billion, with accepting lenders holding more than 50.1 per cent of the loan for the first loan; as such, the agreeing lenders were “necessary lenders” under the credit contract. In the dissenting lender`s complaint, it was alleged that all lenders concerned – not just “necessary lenders” – must approve any amendment that “changes or amends the provisions of sections 2.18 (b) or (c) of the credit contract in a manner that, by its terms, would alter the proportional distribution of the resulting payments.” The deviant lender`s main view is that the transaction, by granting a cascading super-priority position, violated the limitation of the agreement amending the proportional allocation provision, without the agreement of any lender concerned being violated. In the end, in her opinion, the judge, who rejected an injunction, found that the credit contract, in the context of an open market transaction, appears to permit a debt exchange on a non-proportional basis. Section 9.05 (g) states that “any lender may at any time cede to a lender bound for all or part of its rights and obligations under this agreement with respect to its long-term loans… Not on a pro-rata basis. through open purchases on the market… without the consent of the administrative manager. The court also found that “the proposal does not require release or guarantee by security that is subject to existing front-line link agreements.” Since the court found that the amendments “do not affect the so-called “sacred rights” of the applicants under the credit contract, the applicants` consent does not appear to be necessary.” We note that the Tribunal`s decision in serta was made in the context of the decision and the rejection of an application to clear the recapitalization.