Creditor Pacts Face First Legal Test in Suit Against Selecta (1)

A group of lenders to Selecta is suing the vending machine company and some of its bondholders — Strategic Value Partners, Invesco, Man Group and Diameter — in the first legal challenge to the kind of creditor pacts gaining traction in distressed debt negotiations.

Deltroit, Algebris and CQS are among the plaintiffs who initiated legal proceedings in the Southern District of New York on Tuesday, according to court filings. They argue that a restructuring deal the firm agreed earlier this year violated US anti-trust laws by favoring certain debt-holders over others.

The bondholder committee that negotiated with Selecta had also ...