Appeals Court Rules for Education Management on Debt-Cutting Plan
Education Management Corp scored a victory in its fight against an investor opposed to its $1.5 billion debt-cutting plan on Tuesday, when a U.S. appeals court overturned a decision in a closely watched case involving creditors' rights.
The U.S. Court of Appeals in Manhattan said a lower court erred in its ruling that a Depression-era law, the Trust Indenture Act, barred Education Management's plan to restructure its debt.
The appeals court also said the holdout creditor opposing the debt-cutting plan, Marblegate Asset Management LLC, could pursue its right to repayment by suing Education Management. However, the court said Marblegate could not invoke the Trust Indenture Act to retain an "absolute and unconditional" right to payment.