We secured dismissal of all claims brought against lenders that participated in a financing transaction involving Mitel

On December 31, 2024, Davis Polk won an appellate victory in the New York Supreme Court, Appellate Division, First Department, for a group of lenders that participated in an October 2022 financing transaction undertaken by MLN TopCo Ltd. and related entities (collectively, “Mitel”), a major Canadian telecommunications provider. Following the 2022 transaction, the participating lenders were sued, in the Commercial Division of the Supreme Court of New York, by other lenders that did not participate in the 2022 financing.

In the lawsuit, the plaintiffs challenged liens securing more than $850 million in debt owed to the participating lenders, and sought money damages on the basis that the restructuring transaction allegedly violated the terms of preexisting credit agreements, the implied covenant of good faith and fair dealing, and New York’s Uniform Voidable Transaction Act (NYUVTA), among other claims.

Davis Polk filed on behalf of our clients comprehensive motions to dismiss, and on December 5, 2023, Justice Jennifer G. Schecter dismissed the plaintiffs’ claims for breach of the implied covenant of good faith and fair dealing, tortious interference with contract and violation of the NYUVTA.

The parties appealed the trial court’s ruling to the New York Supreme Court, Appellate Division, First Department. The appeals were argued on October 8, 2024, and on December 31, 2024, the panel of five First Department justices (Justices Singh, Pitt-Burke, Higgitt, Rosado and O’Neill Levy) unanimously ruled in favor of the participating lenders on all counts.

The panel agreed with the position of the participating lenders and Mitel that the 2022 transaction complied with the terms of the preexisting credit agreements and likewise did not implicate the implied covenant of good faith and fair dealing. Accordingly, the panel unanimously affirmed the dismissal of the good faith and fair dealing claim and modified the trial court’s ruling to dismiss all surviving declaratory judgment and breach of contract claims asserted against the participating lenders.

The Davis Polk team included partner Elliot Moskowitz, counsel Marc J. Tobak and associate Adam M. Greene. All members of the Davis Polk team are based in the New York office.

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