At the conclusion of expedited proceedings that culminated in a morning of oral arguments on February 24, 2017, Judge Katherine Failla of the Southern District of New York granted from the bench summary judgment to the Firm’s client, JPMorgan, dismissing claims brought by Cumulus Media Inc. against JPMorgan relating to a proposed debt refinancing, and ruling, as JPMorgan asserted, that the proposed refinancing is barred by the terms of the governing credit agreement.
Cumulus is a radio broadcasting company that owns and operates AM and FM stations across the country. JPMorgan is the administrative agent under a credit agreement that provides for the issuance of revolving and term loans to Cumulus, and under which $1.8 billion in secured term loans are outstanding. Cumulus proposed a transaction to refinance $610 million of unsecured Senior Notes with, among other things, new revolving loans that would have been secured pari passu with the existing term loans. When JPMorgan did not approve assignments of revolving commitments (from existing revolving lenders to entities aligned with holders of the Senior Notes) or take other actions to facilitate the proposed transaction, Cumulus filed suit against JPMorgan for a declaration that the credit agreement permitted its proposed refinancing, and alleging that JPMorgan was in breach of the credit agreement. JPMorgan defended the claims on the basis that the refinancing was not permitted under the credit agreement and that it had not, in any event, breached the credit agreement, relying on protections granted to JPMorgan under the credit agreement. Certain of the term loan lenders intervened in the case, also arguing that the refinancing was not permitted.
Cumulus commenced the action on December 12, 2016, and following an initial hearing on December 22, 2016, the Court set a schedule for expedited briefing of cross-motions for summary judgment. The Court’s decision, dictated after arguments by the parties, substantially adopted the Firm’s arguments and held that Cumulus’s refinancing was not permitted under the credit agreement, and that JPMorgan had committed no breach.
The litigation team comprised Tom Rice, Alan Turner (who argued the case), Matt O’Connor and David Rochelson, who worked in close coordination with the corporate team advising JPMorgan on the proposed refinancing, led by Patrick Ryan and Daniel Kay.