Realogy Debt Exchange Violates Contracts, Judge Says
Billionaire investor Carl Icahn and Bank of New York Mellon won a court challenge to Realogy Corp.'s planned $1.1 billion debt exchange when a Delaware judge ruled the real estate company's proposal violates contracts, Bloomberg reported.
The bank, acting as bond trustee, and Icahn's High River LP, owner of Realogy's toggle bonds, sued Nov. 26 claiming the bond-replacement would unfairly manipulate payment priorities and delay the inevitable failure of the company.
"If Realogy wishes to engage in the proposed transaction, it would need to obtain agreement from the required number of its bank lenders to amend or waive certain provisions of the credit agreement," Delaware Chancery Court Judge Stephen Lamb in Wilmington said in a decision released today.
The bank had sought a court order declaring that the transaction breached the complaint's contract claims. Lamb hasn't ruled on High River's request to block the exchange. The bank's arguments hinged on provisions in the credit agreement between Realogy and its first lien bank group and the indenture governing the toggle bonds, according to court papers filed by both sides.
Kathy Borruso, a Realogy spokeswoman, didn't immediately return messages seeking comment.
Icahn didn't immediately return a call to his office seeking comment. Ron Gruendl, a spokesman for Bank of New York Mellon, didn't immediately return voice- and e-mail messages.