Trilogy Portfolio Company, LLC v. Brookfield Real Estate Financial Partners, LLC, C.A. No. 7161-VCP (Del. Ch., Jan. 13, 2012), read opinion here.

Issue Addressed

Whether the restructuring of a $2.7 billion mortgage loan secured by the Atlantis Resort and Casino in the Bahamas created the necessary type of irreparable harm to the lenders which warranted a TRO.

Short Answer:  Yes.


The creditors of a multi-billion dollar loan secured by the Atlantis Resort and Casino in the Bahamas sought expedited injunctive relief to stop a proposed restructuring of a loan which would forgive the debt owed to the junior-most note holders in exchange for an 100% equity interest in the borrower.  Holders of the more senior notes claim that the proposed transaction would unfairly benefit the junior holders of the debt at the expense of the more senior holders and in direct contravention of the terms of the agreements controlling the debt.  The senior holders also sought a TRO on the basis that they would suffer irreparable harm based on the loss of certain rights and the loss of certain guarantees under the terms of the proposed new loan.

This 23-page decision provides a thorough summary of the multiple parties involved and the different layers of creditors and how each of them would be impacted by the proposed transaction.

Procedural History

The verified complaint in this action was filed on January 4, 2012, along with motions for TRO and expedited proceedings.  Responses were filed on January 9, 2012 and a reply brief by the plaintiff was filed on January 10, 2012.  The Court heard oral argument on the TRO motion on January 11, 2012.

Contentions of the Parties

Plaintiffs argued that the proposed transaction was unfair to the creditors and that the proposed loan restructuring would provide a valuable equity interest in the borrower while unfairly transferring substantial risk to the other creditors.  The plaintiffs alleged that the restructuring would violate contractual rights, as well as breach fiduciary duties.


The Court recited the familiar prerequisites that need to be satisfied for a TRO and its “less exacting” scrutiny based on the limited factual record generally available at such an early stage of an expedited proceeding.  See footnotes 7 through 12. 

Contrast this standard, however, with a factual record that is more fully developed, in which event “the traditional temporary restraining order standard is not fully applied and the Court considers whether there is a probability of success on the merits.”  See footnote 13.  In this case, the Court found that the plaintiffs satisfied the prerequisits for a TRO.  The Court required a bond pursuant to Court of Chancery Rule 65(c) in the amount of $100,000 secured, and rejected the request of the defendants that the bond be in the amount of $230 million.

The Court scheduled a preliminary injunction hearing for January 27, 2012, and made the TRO effective immediately.