18 The definition of the „product“ of the security agreement was limited as follows: a junior lender would have to apply for exemption from a certain type of guarantee that a priority lender did not include in its asset base. Once it has been agreed that there will be a personal guarantee from the borrower`s client or a guarantee to the junior lender, the junior lender should ensure that the agreed rights are properly reflected in the interbank agreement and do not stop. 6 These commitments were secured by pawning rights on the bulk of all TCEH assets and revenues, and the relationship between first-rate lenders with respect to common guarantees was settled by an ICA. The proposed recovery plan (the first plan) provided that the creditors of the first pfandrecht received mutual capital in the reorganized TCESH, cash, new CHHR debts and certain other rights (distribution plans), as well as the pawning rights of the first pledge. Non-bond creditors argued that the appropriate plan distributions and protection payments did not constitute „guarantees“ or „revenues“ of security within the meaning of the ICA or securities documents, and that at the time of the petition, they should therefore be prorated among the creditors of the first pledge based on the size of the claims of each class of creditors. To resolve this issue, the bankruptcy court relied on the argument presented to Momentive. RadioShack, an electronics chain of stores, had a complex capital structure when it filed for bankruptcy. RadioShack had two large groups of secured lenders: a group of asset-based lenders or ABL as part of a revolving credit facility and a group of credit lenders. The ABL loan and the long-term loan were accompanied by cross-wage pledges and a fractional collateral structure, with the subordination between the ABL and the term loan, which was governed by an ICA.14, being subdivided into several tranches, each of which is governed by separate AALs.
The ABL was split into a senior group consisting of a number of hedge funds and a last-out lender, which was a subsidiary of Standard General L.P.