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Distressed Debt’s Biggest Brawls Head for Courtroom Showdown

Nov. 21, 2022, 12:30 PM

As more companies tumble into distress and seek emergency financing from a few of their debtholders, they are increasingly triggering lawsuits from other investors who say they were hurt by the transactions.

Since the end of October, money managers have filed three suits seeking to stop or reverse such financings, in cases including cosmetics company Revlon Inc. and aircraft parts maker Incora. The investors say these deals wounded them by, for example, putting newer lenders at the front of the line to collect money if the borrower goes bust.

Courts are signaling they’re interested in hearing these cases. As ...