Debtwired! ConvergeOne ruling: What it means for excluded lenders and the future of RSAs
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Jan 14, 2026 
In this discussion, David Hillman, Global Co-Chair of Proskauer's restructuring group and a seasoned bankruptcy lawyer, delves into the recent ruling in the ConvergeOne case. He explains how the court overturned the bankruptcy plan due to violations of the equal treatment requirement for lenders. Hillman highlights implications for restructuring support agreements and the potential increase in litigation surrounding excluded creditors. He also provides insights on lawful incentives for steering committees and the future of liability management exercises.
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Exclusive Deals Violate Equal Treatment
- Converge One held that exclusive investment opportunities to some creditors in a class violate Section 1123(a)(4)'s equal treatment requirement.
- When value flows from a claim, every creditor in that class must have equal access to that value.
How Converge One Structured The Rights Offering
- Converge One's plan split a $245m rights offering into $160m open and $85m exclusive portions.
- The exclusive $85m and exclusive backstop boosted majority lenders' recoveries by about 30% over peers.
Make Backstops Open Or Market-Tested
- Open rights offerings and backstops to all class members or run a market test before court approval.
- Avoid exclusive backstops that create hidden recoveries for some creditors.