Document: The Bank of New York Mellon v. Realogy Corp., C.A. No. 4200-VCL, Lamb, V.C. (Del. Ch. Dec. 18, 2008)

In order to take advantage of an arbitrage opportunity, Realogy Corporation offered to refinance a class of unsecured indebtedness by exchanging existing notes for participation in a senior secured term loan.  Plaintiff, an indenture trustee of a different class of unsecured Realogy notes, challenged Realogy’s refinancing because it violated indenture terms by discriminating against that class in favor of other classes of unsecured notes.  Applying New York law, the Court of Chancery ruled in favor of the trustee and found that the proposed borrowing did not satisfy the definition of Permitted Refinancing Indebtedness in the bank credit agreement which was incorporated by reference in the subject indenture.