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March 26, 2026
Cadwalader partner Shai Schmidt was featured in Law360 Bankruptcy Authority’s article “Bankruptcy Financing Becomes New Front For Lender Battles,” which examines how aggressive liability management tactics are increasingly migrating into Chapter 11 debtor‑in‑possession (DIP) financing and sparking lender‑on‑lender fights in court. The piece focuses on recent cases such as Del Monte Foods, Multi‑Color Corp., First Brands Group and STG Logistics, where DIP structures and selective rollups have prompted challenges over unequal treatment of similarly situated lenders.
Shai noted that New Jersey has become a key venue for these disputes, as some parties appear to be filing there to sidestep the ConvergeOne decision’s equal‑treatment ruling, which is not binding on New Jersey courts. “Some parties may be betting that New Jersey courts won’t follow ConvergeOne,” he observed, highlighting how venue selection has become a strategic tool in structuring contested DIPs.
He also emphasized that it remains an open question whether courts will extend ConvergeOne’s equal‑treatment principles to non‑pro rata DIP facilities, since those arrangements are typically approved outside of a Chapter 11 plan and may instead turn on the terms of prepetition credit agreements. Shai further explained that framing a DIP as a “sub rosa” plan can be a powerful tactic for excluded lenders, because if a financing package effectively predetermines plan economics, such as equity splits or recovery distributions, the ConvergeOne equal‑treatment requirement may directly apply.
Read the full article here (subscription required).
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