Citadel, Ares, and Cyrus blocked Spirit's $500M government deal over a 90% equity warrant. Guggenheim and CoBank lost the Third Circuit appeal on Del Monte's drop-down.

The objection sits in the warrant. A $500M rescue loan is workable. A $500M rescue loan paired with warrants exercisable into up to 90% of post-bankruptcy equity is a senior creditor recovery cap dressed as a financing package. Citadel, Ares, and Cyrus do not object to government participation in principle; they object to a structure in which the post-bankruptcy equity that would have flowed to senior creditors flows instead to the federal government at warrant-strike economics.^{1 2} The procedural lever is unanimous senior consent. Two of three major groups support, the third blocks, and there is no required-lender threshold that approves at 50.1%. Citadel's counterproposal sits unanswered as the carrier runs out of cash.

Del Monte filed Chapter 11 in July 2025 carrying a $912.5M debtor-in-possession facility ($500M ABL revolver at SOFR plus 550 bps with JPMorgan Chase as agent, $412.5M term loan at SOFR plus 950 bps with Wilmington Savings Fund Society as agent), per ElevenFlo's bankruptcy summary.¹¹ The term loan rolled $247.5M of prepetition Super-Senior First-Out Loans into superpriority DIP debt and added $165M of new money. The Modesto cannery wind-down and a three-way §363 auction split cleared the operating assets across Fresh Del Monte Produce, B&G Foods, and Pacific Coast Producers. The DIP maturity was rolled at least once through the wind-down phase per docket activity; the exact extension orders are not detailed in available secondary coverage.

The structural grievance is the pre-filing 2024 LME, Project Ambrosia. An ad hoc lender group holding 57% of the $725M term loan ($407M) provided $240M in new super-senior money and exchanged its first-lien debt at par into second-out loans, per CreditSights coverage.¹² Asset transfers ran through newly created subsidiaries DM Intermediate, DM Intermediate II, and DMFC. Approximately $105.8M of first-lien holders rejected the exchange and were primed into third-out positions. Black Diamond Commercial Finance later replaced Goldman Sachs as administrative agent. The Guggenheim and CoBank-led group is the rejected residual, now denied a fast-track Third Circuit appeal in April 2026, per Law360 on the appeal denial.¹³ Same structural read as Spirit: enough hold size to make noise, not enough to control, majority consent that worked against them.

The §547 preference attack on the $105.8M April 2025 settlement payments is the group's next live legal action and the underdeveloped story inside the larger story. The payments cleared on April 8, 2025; Del Monte's Chapter 11 filed approximately ninety days later in July 2025, putting the payments at the outer edge of the standard 90-day preference window for outside creditors. The Guggenheim and CoBank-led group's stronger argument is that the consenting majority cohort that received the payments should be deemed §101(31) insiders, given that the LME's priming structure conferred effective control rights. If the recipients are insiders, the reach-back extends to one year and the April 2025 payments fall well within window. The defense will run on §547(c) ordinary-course-of-business and contemporaneous-exchange-for-new-value carveouts; if the settlement is recharacterized as ordinary course or as the contemporaneous quid pro quo for the LME's broader exchange terms, the attack collapses. A Guggenheim and CoBank win on $105.8M would reverse the settlement economics that the prior LME baked in, and the §547(c) defense filings are not yet in the public record.⁹

Four cases set the legal landscape, and the named winners and losers are the operational read. Serta Simmons (June 2020): $200M new super-priority money exchanged about $1B of first-lien at 74% and $300M of second-lien at 39% into a new $875M super-priority second-out tranche. Eaton Vance and Invesco won, Apollo and Angelo Gordon lost. The Fifth Circuit reversed the bankruptcy court's approval on December 31, 2024, holding the transaction was not a permitted "open market purchase," per the Fifth Circuit opinion¹⁴ and Chapman & Cutler's Serta analysis.¹⁵

Mitel Networks (2022, ruling December 2024): a Searchlight-owned super-senior exchange where the consenting majority (including Anchorage and Apollo) won. The New York Appellate Division (First Department) tossed the excluded minority's remaining counts, holding Mitel's contract language did not have Serta's open-market-purchase defect, per Mayer Brown's comparative analysis.¹⁶ Wesco / Incora (2022, rulings 2024 and 2025): an ad hoc majority group including PIMCO and Silver Point provided new-money super-priority debt that primed the residual minority. SDTX bankruptcy court ruled the transaction breached the 2026 Indenture in July 2024; the District Court reversed in December 2025, holding "ranking in right of payment" covers only contractual subordination, not lien or structural, per Cleary Gottlieb on the reversal.¹⁷ Robertshaw (May 2023, ruling June 2024): a One Rock-owned $95M raise where Bain Credit, Canyon, and Eaton Vance won. Invesco, the original controlling lender, lost Required Lender status when Amendment No. 5 diluted its percentage. SDTX Judge Lopez limited Invesco's remedy to monetary damages and upheld the amendment, per Paul Weiss on the Robertshaw decision.¹⁸

Two reads. No fund family consistently loses. Apollo lost Serta and won Mitel. Invesco won Serta and lost Robertshaw. The reliable losers are unaligned minorities without sufficient hold size to block, regardless of identity. Guggenheim and CoBank in Del Monte sit in that role today. The second read is jurisdictional. Fifth Circuit (Serta) is lender-protective. New York First Department (Mitel) and SDTX District Court (Wesco/Incora reversal) are borrower or majority-protective. Outcome turns on contract language and venue selection.

Five items should sit on the next renewal redline for any originator running warehouse, forward-flow, or club facilities at the holding-company level above the operating asset book.

Item 1: rescue financing veto at the senior tranche. Spirit shows Citadel, Ares, and Cyrus blocking a 90% equity dilution because the warrant terms cap claim recoveries, even with two of three majority groups in support. Require 100% senior-tranche consent (not required-lender majority) for any sponsor-led rescue financing, DIP-into-exit conversion, or warrant grant that would transfer more than 25% of post-emergence common equity to a non-lender third party (sponsor, government, or strategic acquirer). The 25% line preserves senior-creditor recovery economics in any conventional recapitalization while still allowing for material outside participation; the 90% Spirit warrant is past any reasonable line and 25% is where to draw it. Required-lender (50.1%) flexibility is the lever Citadel is currently fighting against; eliminate it at the senior layer.

Item 2: sacred rights expansion to structural subordination. The Wesco/Incora district court reversal and the Mitel New York ruling both held that "ranking in right of payment" covers only contractual subordination, not lien or structural. Standard sacred-rights language does not protect against drop-down LMEs or non-pro-rata lien strips. Extend sacred rights to any transfer of collateral to a non-Loan-Party subsidiary, any non-pro-rata exchange of term loans, and any uptier or super-priority issuance not offered pro rata. Each trigger requires all-lender consent.

Item 3: open market purchase definition tightening. The Fifth Circuit reversed Serta because the transaction was not a permitted "open market purchase" under the credit agreement, and borrower-side counsel is now drafting definitions that include exchanges. Lift the post-Serta lender-protective definition verbatim: "open market purchase" means only a cash purchase on a Recognized Exchange or via a Dutch auction offered pro rata to all lenders, not a debt-for-debt exchange, par swap, or bilateral negotiation with a subset.

Item 4: drop-down asset-transfer prohibition with a hard carveout cap. Del Monte, Incora, and J. Crew (the original 2017 case) all moved assets to a non-Loan-Party subsidiary as the isolation step before priming. The lever is the Permitted Investments in Unrestricted Subsidiaries basket. Size the cap to make Del Monte's economics structurally impossible: the $407M ad hoc participation came out of a $725M term loan (about 56%), so a basket capped below 5% of consolidated total assets (cumulative over facility life, with anti-stacking language) blocks the priming math. The lower of 5% or a fixed-dollar floor (commonly $25M to $36M in current direct-lending term sheets) keeps the cap meaningful as the borrower scales.

Item 5: required-lender flip-protection. Robertshaw lost Invesco its Required Lender status mid-restructuring through Amendment No. 5, which issued super-priority debt that diluted Invesco's percentage. Calculate Required Lender percentage on the basis of original commitments at facility close, not outstanding principal, for waivers, amendments, acceleration, collateral release, and any vote on additional indebtedness. This freezes voting calculus against post-close dilution.

The transactions sit in big-cap, but the contract language drifts everywhere. Drop-down structures, non-pro-rata uptiers, and required-lender dilutions are credit-agreement mechanics, not asset-class mechanics. They migrate down-market through borrower-side counsel templates the same way every precedent does.

The transfer test: does your warehouse or forward-flow facility have an Unrestricted Subsidiaries basket sized to permit a meaningful drop-down of servicing or collection rights? Does it define Required Lender on outstanding principal rather than original commitments? Do sacred rights cover structural subordination explicitly, or only contractual? In most facilities, the answers are yes, yes, and contractual only. Asset-class exposure varies: bilateral MCA warehouses face the least risk (no minority to prime), club factoring facilities face the most direct hit (the same 51% to 57% consenting math Del Monte exhibited), and originators with public debt at the holding-company level face exactly the playbook Serta, Mitel, Incora, and Robertshaw rehearsed.

Trade creditor recovery is a separate playbook. The factoring shops and equipment finance lenders that recovered well from CPG bankruptcies in 2024 and 2025 aggregated §503(b)(9) administrative claims for goods delivered in the twenty days before petition, perfected setoff rights against pre-petition receivables, and worked through §363 sales to extract assumption of executory contracts where the buyer needed the relationship. None of that helps a senior secured lender already primed before the petition. The hold-out fight is the senior fight. The trade creditor fight is downstream.

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A seven-member Guggenheim and CoBank-led minority group is contesting Del Monte's Chapter 11 wind-down before Judge Kaplan in the District of New Jersey. The group lost its direct Third Circuit appeal certification on April 3, 2026 and is now attacking $105.8M in April 2025 settlement payments as preferential transfers under §547. Same hold-out math as Spirit, on the back end of a 2024 drop-down plus non-pro-rata uptier that primed roughly $105.8M of first-lien holders into third-out positions.

SDTX Judge Alfred H. Bennett rejected the proposed $68M consent decree between the DOJ, the CFPB, and Colony Ridge Development LLC on April 28, 2026, writing the settlement "bears little relationship to the claims asserted in the complaint." The 2023 lawsuit alleged predatory subprime financing targeting Hispanic borrowers. The settlement allocated $48M for infrastructure and $20M for "increased law enforcement presence and effectiveness," with zero direct compensation to the consumers named in the complaint. DOJ AAG Harmeet K. Dhillon then voluntarily dismissed the case with prejudice and executed the agreement as an out-of-court private settlement, removing judicial supervision. Colony Ridge declined public comment.

MeridianLink announced six new board members on April 27, 2026, six months after Centerbridge closed a $2.0B all-cash acquisition at $20 per share. The signal addition is Jonathan Corr, the retired Ellie Mae CEO who ran the 2019 Thoma Bravo privatization and 2020 sale to ICE Mortgage Technology that consolidated Encompass into the dominant mortgage LOS. The implicit thesis is replicating that consolidation play for community banks and credit unions, with AI-enabled underwriting as the wedge. For independent MCA brokers and direct-to-merchant alt-lenders, this is the AI-LOS layer of bank-sponsored fintech competition coming together publicly.

The Bancorp's Q1 2026 fintech lending hit $1.67B, with credit sponsorship balances at $1.65B (up 50% from year-end). Credit sponsorship is now 21% of total loans (15% prior quarter, 9% YoY) and accounted for 88% of linked-quarter loan growth. Chime is the deepest partner; Cash App ramps through 2027. Management's "Apex 2030" target is credit sponsorship at 30% to 40% of balance sheet within three to four years. NIM compressed 43 bps to 3.87% as fintech sponsorship economics (about 3% NIM, NIB deposit funded) replaced spread-lending. Independent MCA brokers funding SMB-adjacent borrowers should expect TBBK-funded competitors to undercut on rate by 200 to 400 bps as that compression flows to product pricing.