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Note: A group of First Lien Creditors who contributed to a Deposit LC Loan Collateral Account sued another group of First Lien Creditors who did not contribute in the bankruptcy of Energy Future Holding Corp. They sought a declaration that the Deposit Creditor have priority in the Deposit LC Loan Collateral Account. The Non-Contributing Creditors moved to dismiss the action. The United States Bankruptcy Court for the District of Delaware, Sontchi, J., granted the motion.

In explaining the facility, the opinion noted: “Upon the initial closing of the Credit Agreement, the Deposit L/C Loan Facility Lenders, including Plaintiff s predecessors in interest, funded the USD 1.25 billion Deposit L/C Loan Facility amount into the Deposit L/C Loan Collateral Account, establishing the maximum amount of Deposit Letters of Credit that could be issued by the “Deposit Letter of Credit Issuer(s)” at the request of the Borrower. The Borrower then requested that the Deposit Letter of Credit Issuers issue Deposit Letters of Credit to third parties to whom the Borrower or its subsidiaries owed or might owe obligations (the “Letter of Credit Beneficiaries”). In order to recover amounts owing to them by the Borrower, the Letter of Credit Beneficiaries could present their applicable Deposit Letters of Credit to the Deposit Letter of Credit Issuers for payment, if and when necessary. The Deposit Letter of Credit Issuers would pay the Letter of Credit Beneficiaries the amount of the applicable draws, and seek reimbursement from the Borrower for those amounts. If the Borrower did not reimburse the Deposit Letter of Credit Issuer, the Deposit Letter of Credit Issuer had the first right to withdraw the unpaid reimbursement amount from the Deposit L/C Loan Collateral Account and reimburse itself.”

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