In April 2010, SW Boston Hotel Venture LLC and certain related entities filed for Chapter 11 bankruptcy. Prior to the Chapter 11 filings, Borrower was indebted to both Prudential Insurance Company of America and the City of Boston. Prudential held the senior facility. In connection with such loans, Prudential and the city entered into an intercreditor agreement whereby Boston expressly agreed to assign its voting rights in any borrower bankruptcy case.
In support of plan confirmation, the City of Boston voted in favor of the plan, as did every other voting creditor class except Prudential. Prudential objected that the plan failed to enforce the intercreditor agreement and subordination of the city’s voting rights. Prudential argued that the city lacked standing to vote based upon the express assignment of its voting rights.