Friedman Kaplan Secures Post-Trial Settlement in Innovative Del Monte LME Lawsuit
In February 2025, a team of Friedman Kaplan litigators led by partner Anne E. Beaumont completed an expedited trial of a Section 225 action in the Delaware Court of Chancery which challenged a 2024 liability management exercise (LME) undertaken by Del Monte Foods, Inc. with an ad hoc group of its first-lien lenders. The 2024 transaction transferred substantially all of Del Monte’s assets – which secured an existing $725 million first-lien term loan – to a new subsidiary, which purported to use those assets as collateral for new super-priority loans from the ad hoc group.
A conventional breach-of-contract case challenging a liability management exercise and seeking damages can take years and plays out under the shadow of a distressed borrower, often with a substantial risk of a bankruptcy filing before the case can be resolved. Recognizing this, Friedman Kaplan developed a strategy to avoid such impediments. A group of Del Monte’s remaining first-lien lenders removed the existing Agent for the original term loan and appointed Black Diamond Commercial Finance, L.L.C. (BDCF) as successor Agent. These lenders then directed BDCF to issue the first of a number of notices to Del Monte that the 2024 transactions resulted in Events of Default under the credit agreement for the existing term loan and to exercise the contractual right to replace Del Monte’s board of directors as a result of such Events of Default. Days later, Del Monte objected, disputing the appointment of new directors, and within hours, Friedman Kaplan and Delaware counsel Morris James LLP filed an action on behalf of BDCF in the Delaware Court of Chancery.
BDCF sued under Section 225 of the Delaware General Corporation Law seeking confirmation that the newly appointed directors validly constituted the board of directors of Del Monte. This strategy required the Court to adjudicate the validity of the Events of Default which gave rise to the right to replace Del Monte’s board and to do so on an expedited basis. Just four months after the case’s filing, the parties tried the case before Vice Chancellor Lori W. Will. In April 2025, the day before closing arguments before Vice Chancellor Will, the parties entered into a settlement. Friedman Kaplan’s groundbreaking strategy and the settlement were covered in a recent 9fin article (subscription required).
Anne commented, “Setting aside the playbook and crafting a novel strategy tailored to the client’s objectives is a hallmark of Friedman Kaplan’s litigation practice. This team – working seamlessly in both New York and Wilmington – did yeoman work on an extremely demanding timeline, and I’m incredibly proud of their relentless dedication to achieving this outstanding outcome for our client BDCF.”
In addition to Anne, Friedman Kaplan’s trial team consisted of partner David Ranzenhofer, associates Dania Bardavid, Jason Koffler, and Ian Bruckner, and paralegals Emily Redunski and Austin Cross. Morris James LLP served as BDCF’s Delaware counsel.
This case is the latest in a series of high-stakes matters Friedman Kaplan has handled involving disputes over liability management exercises and other restructuring transactions, including the Serta case in which our clients recently prevailed on appeal, and the Hovnanian case, in which our client defeated an attempt to enjoin the closing of a cutting-edge debt refinancing transaction.
