The ruling, which held that the transaction did not violate the implied covenant of good faith and fair dealing, highlights the importance of carefully drafting lending documents.

On June 6, 2023, Judge David Jones of the United States Bankruptcy Court for the Southern District of Texas (the Bankruptcy Court) held that the 2020 Serta Simmons "uptier" transaction (the Transaction) was permitted under Serta's existing 2016 credit agreement (the Credit Agreement), a decision that could have broad implications for the permissibility of such transactions.1

In a highly anticipated decision issued last Thursday (on December 19, 2019), the United States Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC that a bankruptcy court may constitutionally confirm a chapter 11 plan of reorganization that contains nonconsensual third-party releases. The court considered whether, pursuant to the United States Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 (2011), Article III of the United States Constitution prohibits a bankruptcy court from granting such releases.