Two creditors of TPC Group Inc. lost a bankruptcy court ruling on Wednesday, with a judge saying that the chemical business didn’t act improperly when loan documents were amended to change the pecking order of creditors, WSJ Pro Bankruptcy reported. Judge Craig Goldblatt of the U.S. Bankruptcy Court in Wilmington, Del., said TPC didn’t violate the rights of Cerberus Capital Management LP and Bayside Capital Inc., who combined own about 10% of TPC’s $930 million senior secured notes issued in 2019. TPC in 2021 and 2022 issued roughly $200 million in 10.875% notes senior to its 2019 notes and the transactions were backed by creditors holding most of the existing debt. The Houston-based company filed for bankruptcy protection in June with a restructuring agreement with most creditors. Cerberus and Bayside, who didn’t consent to the agreement, sued TPC shortly after its bankruptcy filing, arguing the company breached its credit agreements by layering new debt on top of the notes Cerberus and Bayside hold without their consent. The court concluded on Wednesday that the loan documents permitted the majority holders to amend the agreement to allow for the subordination of the old debt to the new notes, Judge Goldblatt wrote. “As a result, the debt now held by the majority holders is senior to that of the minority lenders,” he wrote.
