Beal Sav. Bank v Sommer

[*1] Beal Sav. Bank v Sommer 2005 NY Slip Op 52075(U) [10 Misc 3d 1062(A)] Decided on December 15, 2005 Supreme Court, New York County Fried, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on December 15, 2005
Supreme Court, New York County

Beal Savings Bank, Plaintiff,

against

Viola Sommer, JACK SOMMER and EUGENE LANDSBERG, as Trustees of the TRUST UNDER ARTICLE SIXTH UNDER THE WILL OF SIGMUND SOMMER, Defendants.



601222/05



Defendants' Counsel:Jay Kasner

Scott D. Musoff

Patrick N. Findlay

Skadden, Arps, Slate, Meagher &

Flom LLP

Four Times Square

New York, New York 10036-6522

(212) 735-3000

Plaintiff's Counsel:Michael L. Cook

David M. Hillman

Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

(212) 756-2000

Theodore W. Daniel

Jenkins & Gilchrist

1445 Ross Avenue, Suite 3700

Dallas, Texas 75202-2799

(214) 855-4500

Bernard J. Fried, J.

Defendants move for an order, pursuant to CPLR 3211 (a) (1) and (7), dismissing the complaint.

This is a breach of contract action by the assignee of a lender, plaintiff Beal Savings Bank (Beal), against the defendants (the Trust) for breach of a Keep-Well Agreement, one agreement in a multi-instrument syndicated loan arrangement made in connection with the development of a casino in Las Vegas, Nevada. In the Keep-Well Agreement, the Trust, as well as other Sponsors, provided certain undertakings to maintain set financial ratios and attributes of its subsidiary, the borrower. In late 2001, the borrower was forced into filing for bankruptcy protection, and defaulted on the loan. Thirty-six of 37 of the lenders, representing 95.5% of the debt, settled with the Trust on all of the Trust's outstanding obligations under the loan documents. Plaintiff Beal, which acquired its interest in 4.5% of the borrower's debt by an assignment after the bankruptcy filing, did not enter into the settlement agreement. However, it received its pro rata share of the settlement. Beal now brings this suit individually, seeking to enforce the Keep-Well Agreement.

On February 26, 1998, the Trust invested in the construction and development by Aladdin Gaming, LLC (the Borrower) of the Aladdin Resort & Casino in Las Vegas, Nevada. The financing for this development came from a $410 million credit facility governed by a Credit Agreement, dated February 26, 1998, between the Borrower and various financial institutions as the lenders. The credit facility was administered through an Administrative Agent for the lenders, the Bank of Nova Scotia (sometimes referred to in the documents as Scotiabank). Complaint, ¶ 5; see Exhibit 3 to Notice of Motion, Credit Agreement, § 9.1. The Bank of Nova Scotia was later replaced as Administrative Agent by BNY Asset Solutions, LLC. See Complaint, ¶ 12. The lending consortium was originally composed of 13 institutions. The loan and security thereunder were evidenced by a number of documents (the Loan Documents). The "Loan Documents" included, among other things, the Credit Agreement, and the Keep-Well Agreement, as well as promissory notes, Letters of Credit, Pledge Agreements, Guarantees and other documents. Exhibit A to Notice of Motion, Credit Agreement, § 1.1, at 43. [*2]

In the Credit Agreement, the lenders authorized the Bank of Nova Scotia to act on their behalf under each of the loan documents, and, in the absence of other written instructions from the "Required Lenders," "to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Administrative Agent by the terms hereof and thereof, together with such powers as may be reasonably incidental thereto." Id., § 9.1, at 150. "Required Lenders" is defined in the agreement as non-defaulting lenders holding at least 66 2/3 % of the sum of the aggregate outstanding principal amount of the loans plus the participation interests of those lenders in the outstanding Letters of Credit. Id., § 1.1, at 59.

The Credit Agreement provides that the Administrative Agent determines the Base Rate of interest, as well as the LIBO Rate. Id., § 3.2, at 81( see id., § 1.1, "Base Rate" defined at 9; "LIBO Rate" defined at 42). It also provides that all payments by the Borrower shall be made to the Administrative Agent for the pro rata account of the lenders entitled to receive such payment. Id., § 4.7, at 87. The Borrower, "the other Aladdin Parties, (other than the Trust and Aladdin Music), LCNI and London Clubs" were obligated to give the Administrative Agent their audited financial statements prior to the effective date of the Credit Agreement. Id., § 5.1.4, at 93.

The Credit Agreement lists in Article 8 the events of default. Section 8.1.4 provides that the default by the Borrower, any of the other Aladdin parties, and the Sponsors, in the performance of any Operative Document executed by it, constitutes an event of default under the Credit Agreement. Id., § 8.1.4, at 142 ("Operative Document" means any Loan Document [id., § 1.1, at 52]). Section 8.3 sets forth the action to be taken upon an event of default. Id., § 8.3, at 147. Generally, it provides that the Administrative Agent, upon the direction of the Required Lenders, will provide notice to the Borrower and accelerate all or any portion of the outstanding principal due on the loan and other obligations. Id. It further provides that the Administrative Agent upon direction of the Required Lenders: may, without further notice . . . exercise any and all rights and remedies at law or in equity, including, without prejudice to the Lenders' other rights and remedies, the following . . . ( h) recover judgment on the Completion Guaranty or the Keep-Well Agreement either before, during or after any proceedings for the enforcement of the Lenders' rights and remedies herein or in any of the other Loan Documents.

Id., § 8.3 (h), at 149. The Credit Agreement contains a cumulative remedies provision in section 10.20. That section states that no right or remedy conferred on the Administrative Agent or the Lenders in the agreement was intended to be exclusive of any other right or remedy contained in the other Loan Documents or at law or in equity, and that every right and remedy was cumulative. Id., § 10.20, at 165.

The Borrower's obligations under the Credit Agreement were guaranteed in part pursuant to the Keep-Well Agreement, also executed on February 26, 1998. Complaint ¶ 6, and exhibit A annexed thereto; see also Exhibit C to Notice of Motion. The Keep-Well Agreement is a "Loan Document" and "Operative Document" as defined in the Credit Agreement. See Credit Agreement, § 1.1, at 43-44, 52. The Keep-Well Agreement provided that London Clubs International PLC, Aladdin Bazaar Holdings, LLC, and Aladdin Holdings, LLC, as the Sponsors of the Borrower, would make certain equity contributions to the Borrower if its financial ratio [*3]fell below a certain minimum. Exhibit C to Notice of Motion, Keep-Well Agreement, § 2, at 6-7. Section 4 of the Keep-Well Agreement provided that, upon acceleration of the Borrower's obligations under the Credit Agreement, each Sponsor guaranteed and agreed to pay the Accelerated Payment Amount (as defined in the Keep-Well Agreement) to the Administrative Agent for the benefit of the lenders not later than 40 days following the date of such acceleration. Id., § 4, at 8-9. In Section 18, the "Miscellaneous Provisions," subsection (a) provides that the Keep-Well Agreement is a "Loan Document" executed pursuant to the Credit Agreement and "shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof." Id., § 18 (a), at 39. Subsection (b) of that same section states that the Agreement is binding upon the Sponsors and their successors, and that it shall be "enforceable by the Administrative Agent and each Lender." Id., § 18 (b). Subsection (e) further provides that the remedies provided therein are cumulative and not exclusive of any remedies provided by law. Id., § 18 (e), at 41.

In July 2000, the Borrower obtained a $50 million increase in funds available under the Credit Agreement. Exhibit B to Notice of Motion, Fourth Amendment to Credit Agreement, dated July 27, 2000. As part of that restructuring, defendant Trust agreed to become a Sponsor under the Keep-Well Agreement. Exhibit A to Complaint; Exhibit C to Notice of Motion. As with the other Sponsors under the Keep-Well Agreement, the Trust provided undertakings to maintain certain financial ratios and attributes of the Borrower. Exhibit C to Notice of Motion, Keep-Well Agreement, §§ 2-4. The Trust was required to advance funds to the Borrower (§§ 2-3) and to the Administrative Agent (§ 4).

After construction was completed and the Aladdin casino was operating, on September 28, 2001, the Borrower sought bankruptcy protection. Exhibit D to Notice of Motion, Aladdin Gaming, LLC's Chapter 11 Petition. Thereafter, Beal's predecessor obtained its interest of 4.5% in the aggregate outstanding term loan amounts under the Credit Agreement. Exhibit F to Notice of Motion.

On September 30, 2002, the Administrative Agent and all the lenders, except Beal or its predecessor, entered into a Settlement Agreement with the Trust and two other Sponsors. Complaint, ¶ 12; Exhibit G to Notice of Motion. The Settlement Agreement directed the Administrative Agent, through the agreement of the lenders holding 95.5% of the sum of the aggregate outstanding principal amount of the loans, not to pursue legal action to enforce the Keep-Well Agreement against the Trust. It also directed the Administrative Agent to turn over to the Trust, pursuant to the sharing clause under section 4.8 of the Credit Agreement, any amount collected on behalf of the 95.5% group of lenders from Beal or its predecessors, and if they did not remit such amounts, then the lenders would assign their rights to sue Beal or its predecessors for the recovery of such amounts to the settling sponsors. Beal's predecessor received its pro rata share of the monetary compensation under this Settlement Agreement. See id.; Exhibit H to Notice of Motion.

Beal now brings this action against the Trust for breach of the Keep-Well Agreement for its failure to pay Beal, as a lender, the Accelerated Payment Amount, as defined in the Keep-Well Agreement, which Beal avers is at least $90 million. Complaint, ¶¶ 9-12.

In moving to dismiss, the Trust contends that Beal lacks standing to bring this claim. It asserts that the Keep-Well Agreement is part of the Loan Documents, and is governed by the related provisions in the Credit Agreement. The Trust urges that the remedy provisions in [*4]section 8 of the Credit Agreement provide the mechanism for recovering a judgment on the Keep-Well Agreement. Specifically, it contends that section 8.3 (h) directs the Administrative Agent at the direction of the Required Lenders to "recover judgment on the . . . Keep-Well Agreement either before, during or after any proceedings for the enforcement of the Lender's rights and remedies [under the Credit Agreement] or under the Loan Documents." Exhibit A to Notice of Motion, Credit Agreement, § 8.3 (h). The Trust argues that this provision precludes any entity other than the designated entity, in this case, the Administrative Agent at the direction of the Required Lenders, from duly bringing suit to recover a judgment. It maintains that section 18 (b) of the Keep-Well Agreement, the provision upon which Beal relies for standing, does not provide a basis for such standing in light of section 18 (a) immediately above it, and section 8.3 (h) of the Credit Agreement. It asserts that the overall scheme of the Loan Documents was of collective lender action, and to prevent the precise situation here a rogue minority lender seeking to recover additional money from the Trust notwithstanding the settlement by the lenders holding 95.5% of the debt. Finally, even if there was some basis for Beal's standing, no lender could seek more than its pro rata share in Beal's case, 4.5% and under the sharing clause, all lenders must share any payments they receive with the entire syndicate so that no lender recovers more than its pro rata share of those payments.

In response, Beal urges that, under section 18 (a) of the Keep-Well Agreement, the express provisions of the Keep-Well Agreement control over the Credit Agreement. Beal then urges that section 18 (b) of the Keep-Well Agreement, which provides that the agreement was binding upon the Sponsors, and "enforceable by the Administrative Agent and each Lender and their respective successors," expressly authorizes it individually to enforce that agreement. It argues that there is nothing in the Credit Agreement that abrogates that express right. Beal points to section 10.20 of the Credit Agreement regarding cumulative remedies as support that the remedies provided in the Credit Agreement were not exclusive of its right to enforce the Keep-Well Agreement. Beal also points to the sharing provision in the Credit Agreement to show that the agreement contemplated a recovery by an individual lender of the full amount owed under the Keep-Well Agreement, and provides that in such circumstances, the individual lender must remit the other lenders' ratable shares. Beal further relies on other provisions in sections 8, 9, 11, and 18 of the Keep-Well Agreement, each of which make references to the "Administrative Agent or any Lender," as proof that the Credit Agreement contemplated individual action by a lender.

The defendants are entitled to dismissal of this breach of contract claim for lack of standing based on the clear and unambiguous language of the Loan Documents. Dismissal of a complaint pursuant to CPLR 3211 (a) (1) is warranted "where the documentary evidence submitted conclusively establishes a defense to the asserted claims as a matter of law.'" 150 Broadway NY Assocs., L.P. v Bodner, 14 AD3d 1, 5 (1st Dept 2004), quoting Leon v Martinez, 84 NY2d 83, 88 (1994); see Skillgames, LLC v Brody, 1 AD3d 247, 250 (1st Dept 2003). Where a written contract clearly contradicts the complaint allegation supporting the breach of contract claim, the contract itself constitutes the documentary evidence warranting dismissal under CPLR 3211 (a) (1). 159 Broadway NY Assocs., L.P. v Bodner, supra. Construction of an unambiguous contract is a matter of law, appropriate for disposition by the court. Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470 (2004); W.W.W. Associates v Giancontieri, 77 NY2d 157, 162 (1990). "When the terms of a contract are clear and [*5]unambiguous, the intent of the parties must be found within the four corners of the document" (ABS Partnership v AirTran Airways, Inc., 1 AD3d 24, 29 [1st Dept 2003][citations omitted]), and the writing should be enforced according to its terms. Vermont Teddy Bear Co. v 538 Madison Realty Co., supra; W.W.W. Associates v Giancontieri, supra; see Reiss v Financial Performance Corp., 97 NY2d 195, 199 (2001).

A contract does not become ambiguous simply because the parties argue different interpretations. See Bethlehem Steel Co. v Turner Constr. Co., 2 NY2d 456, 460 (1957); Moore v Kopel, 237 AD2d 124 (1st Dept 1997). A contract is to be interpreted so that no portion of the contract is rendered meaningless. Excess Ins. Co. Ltd. v Factory Mut. Ins., 3 NY3d 577, 582 (2004). In examining a contract to find the parties' intent as to a particular section, the entire contract will be read as a whole and in the context of the parties' relationship, rather than isolating distinct provisions out of an entire agreement. Matter of Riconda, 90 NY2d 733, 738 (1997).[FN1]

Here, the Loan Documents explicitly and implicitly preclude Beal from suing individually to recover a judgment under the Keep-Well Agreement. First, Beal brings this action pursuant to paragraph 4 of the Keep-Well Agreement, which provides that the Sponsors would pay the accelerated amount in the event of acceleration of the Borrower's obligation under section 8.2 or 8.3 of the Credit Agreement. Under both the provisions of the Credit Agreement and the Keep-Well Agreement, the Keep-Well Agreement is a "Loan Document," and is considered part of the Credit Agreement. Credit Agreement, § 1.1, at 39, 43-44, 52; Keep-Well Agreement, § 18 (a). Section 18 (a) of the Keep-Well Agreement states that it "shall (unless otherwise expressly indicated [in the Keep-Well Agreement]) be construed, administered and applied in accordance with the terms and provisions [of the Credit Agreement]." Thus, only if there is an express provision in the Keep-Well Agreement does it control over the provisions of the Credit Agreement.

The Keep-Well Agreement is just a part of the transaction represented by the Credit Agreement. A default under the Keep-Well Agreement is an Event of Default under the Credit Agreement. See Credit Agreement §§ 8.1, 8.1.4. The Credit Agreement, not the Keep-Well Agreement, sets forth the Events of Default and the mechanisms for recovering a judgment upon such defaults, including recovering a judgment on the Keep-Well Agreement. See Credit Agreement, § 8.3 (h).

Section 8.3 of the Credit Agreement specifically provides the remedies for an Event of Default such as the failure to pay under the Keep-Well Agreement. It gives the Administrative Agent, acting upon the direction of the "Required Lenders," the authority to exercise all rights and remedies available under the law "in any combination or order that the Lenders may elect." Credit Agreement, § 8.3. The Required Lenders is defined as lenders collectively holding two thirds of the outstanding debt of the Borrower. Credit Agreement, § 1.1, at 59. Section 8.3 (h) specifically states that the Administrative Agent, acting at the direction of the Required Lenders, [*6]may "recover judgment on the . . . Keep-Well Agreement either before during or after any proceedings for the enforcement of the Lenders' rights and remedies herein or in any of the other Loan Documents." Credit Agreement, § 8.3 (h), at 149. Therefore, the Credit Agreement clearly authorizes only the Administrative Agent at the direction of the Required Lenders to bring an action for a judgment on the Keep-Well Agreement.

Beal's contention that, nevertheless, it has standing to bring this individual action, based on section 18 (b) of the Keep-Well Agreement, must be rejected for several reasons. Section 18 (b) of the Keep-Well Agreement, simply states, in very general terms, that the agreement is binding on the Sponsors, and is enforceable by the Administrative Agent and each Lender. Section 18 (a) provides that the Keep-Well Agreement, unless otherwise expressly stated therein, is governed by the Credit Agreement. The Keep-Well Agreement does not contain any default or remedies provisions, and section 18 (b) does not expressly contravene the administration and application of those provisions of the Credit Agreement. Instead, the default remedies section of the Credit Agreement, section 8.3 (h), demonstrates that the recovery of a judgment on the Keep-Well Agreement is to be pursued by the Administrative Agent at the direction of a vote of a supermajority of the lenders. The general enforcement language contained in section 18 (b) does not override the express provision in section 8.3 (h) of the Credit Agreement, and the collective scheme of enforcement it sets forth. It is evident that Beal seeks to read section 18 (b) out of context of the whole agreement, and in a manner that thwarts the overall collective enforcement scheme.

Beal's construction of the Keep-Well Agreement would render section 8.3 (h) of the Credit Agreement meaningless. There would be no point to a vote and direction by the Required Lenders if each lender were able to separately recover a judgment on the Keep-Well Agreement. It is basic that an agreement should not be interpreted in a way which leaves a part meaningless or ineffectual. Excess Ins. Co. Ltd. v Factory Mut. Ins., 3 NY2d 577, supra. The court further notes that, in this case, the Administrative Agent has exercised its role under section 8.3 (h) of the Credit Agreement 95.5% of the lenders had decided that it was in their best interests to accept the terms of the settlement instead of suing for damages under the Credit Agreement and the Keep-Well Agreement.

In addition to the language of these agreements, it is apparent from reading the Loan Documents as a whole that they created a scheme of collective lender action that restricts a minority lender, such as Beal, from acting unilaterally to recover a judgment. See Credit Francais Intl., S.A. v Sociedad Financiera de Comercio, C.A., 128 Misc 2d 564 (Sup Ct, NY County 1985). In Credit Francais, the court examined a similar loan transaction in which a consortium of banks, of which plaintiff bank was a member, loaned money to the borrower, and an agent was designated to act with the consent of or at the direction of a majority of the participating banks. As here, the plaintiff sought to proceed against the borrower in a way which was contrary to the course the other members of the consortium chose. It contended that while the agent was authorized to act on behalf of all the members collectively, there was nothing to preclude it from proceeding by itself without majority consent. In considering whether the plaintiff had standing to sue, Credit Francais looked to the agreement as a whole and determined that the transaction was between the borrower and a consortium of lending banks. The agreement contained provisions demonstrating that the parties contemplated that there would be collective action taken by the agent on behalf of all of the consortium, or pursuant to [*7]the direction of a majority of lenders. For example, the agreement provided that the agent determined the rate of interest; repayments were made to the agent; advances for the borrower were made to the agent; the agent had access to the financial statements and books of the borrower; the borrower was required to give notice to the agent of substantial claims against it or which could give rise to acceleration; the borrower had to obtain the written consent of the agent for any merger or consolidation or disposal of a significant portion of assets; and the agent had to give prior written consent to prepayment or rescheduling of the debt. These provisions make clear that in virtually all aspects of the relationship, only the agent was empowered to act on behalf of all the lending banks. The Deposit Agreement, at issue, provided for events of acceleration, which only occurred when the agent " with the consent or at the direction of the Majority Depositors'" declared the entire amount due. Id. at 578 (quoting agreement). Further, the Deposit Agreement contained a sharing provision which prevented any participating bank from obtaining an undue preference over another. If the bank received any payment other than through the agent, the bank was to receive it as agent on behalf of all the other banks. Based on these provisions, the court found that the parties had created a unitary body in which only unitary action could be permitted. They sought to resolve in advance and prevent the possibility of multiple suits by individual lenders "working at cross purposes for their own individual benefit." The court specifically found that it would be chaotic if each participating bank were to take separate action. Thus, Credit Francais held that the overall contractual scheme called for collective action by the consortium, and that the plaintiff bank, as an individual member of that consortium, had no standing to bring an action solely on its own behalf. See also In re Enron Corp., 302 BR 463, 473 (Bankr SD NY 2003), affd 2005 WL 356985 (SD NY 2005).

Similarly, here, the Loan Documents, read as a whole, call for the collective enforcement in the event of default, as set forth in section 8 of the Credit Agreement. The overall design of these documents is to have unified action handled by the agent who will proceed so that no individual lender would gain a preference over the others. As in Credit Francais, the Credit Agreement provides that the agent, the Bank of Nova Scotia, acts on behalf of all the lenders in virtually all aspects, including, for example, setting the rates of interest, collecting all payments by the Borrower, making payments to the lender, obtaining the financial statements from the Borrower and certain affiliates, and having the right to review the Borrower's books and records. See Credit Agreement, Articles II, II, V, VI and IX. The agent enjoys a broad grant of powers. See id., § 9.1. As discussed above, only the Credit Agreement contains the provisions for default and remedies. Under section 8.3 of the Credit Agreement, it is the Administrative Agent who has the right to accelerate and recover a judgment as directed by the Required Lenders. No individual lender is given this right. See Credit Francais Intl., S.A. v Sociedad Financiera de Comercio, C.A., 128 Misc 2d at 578.

In section 9.1 of the Credit Agreement, each lender appointed the Administrative Agent to act on its behalf with respect to all the Loan Documents, and in the absence of other written instructions received from the Required Lenders, to exercise such powers specifically delegated to and required of the agent. See Credit Agreement, § 9.1; see also Keep-Well Agreement, § 18 (a). Thus, the overall system of collective action is apparent from the lenders' broad grant of power to the Administrative Agent. The sharing clause, in section 4.8, which provides that if any lender obtains any payment in excess of its pro rata share of payments then obtained by all lenders, it had to share the payment or other recovery ratably with each of them, supports the [*8]collective design in these agreements by preventing any lender from obtaining an undue preference over another. Credit Agreement, § 4.8, at 88; see Credit Francais Intl., S.A. v Sociedad Financiera de Comercio, C.A., 128 Misc 2d at 578; see also New Bank of New England, N.A. v Toronto-Dominion Bank, 768 F Supp 1017, 1023 (SD NY 1991) (where majority vote of lenders was required for acceleration and foreclosure under syndicated loan agreement, minority lender could not compel majority to exercise such remedies under theory of implied right).

Contrary to Beal's contention, the fact that the Loan Documents contain cumulative remedies provisions does not warrant a different result: that the rights or remedies conferred on the agent or lenders are declared to be cumulative just assures the parties that the election of one remedy does not preclude another. There is nothing in section 10.20 of the Credit Agreement or section 18 (e) of the Keep-Well Agreement which would justify a departure from the overall design which is to have the Administrative Agent act for all the lenders or at the direction of the Required Lenders, rather than have the lenders competing and conflicting with one another in enforcing the Loan Documents. See Credit Francais Intl., S.A. v Sociedad Financiera de Comercio, C.A., 128 Misc 2d at 579-80; see also In re Enron Corp., 302 BR at 475 (cumulative rights provision is intended to preserve available alternate remedies when party initially elects to pursue certain other available remedies it does not create new rights contrary to overall contractual scheme).

Beal relies on Commercial Bank of Kuwait v Rafidain Bank (15 F3d 238 [2d Cir 1994]), which involved a consortium of bank lenders where a lead bank was appointed as the agent under the agreement. The agreement at issue, however, involved a narrow grant of power to the lead bank, and provided that it could sue only if requested to do so by the majority of lenders. The Court held that the plaintiff lender had standing to sue based on the rule that an undisclosed principal can sue on a contract even if its name and even existence is undisclosed, except when the terms of the contract expressly or impliedly confine it to the parties to it. The Court found that the lending agreement did not contain such terms. Here, in contrast, the Credit Agreement does expressly or impliedly preclude Beal, as a minority lender, from recovering a judgment on the Keep-Well Agreement, and contains a much broader grant of power to the Administrative Agent both generally and with regard to default remedies. See In re Enron, 302 BR at 473, affd 2005 WL 356985, *7.

A.I. Credit Corp. v Government of Jamaica (666 F Supp 629 [SD NY 1987]), also relied upon by Beal, is distinguishable. In that action, the court found that the agreement specifically and expressly provided that the debt owed to the plaintiff lender by the borrower was separate and divisible from the rights of its fellow creditors. In fact, the court quoted from the agreement that "each Bank shall be entitled to protect and enforce its rights arising out of this Agreement, and it shall not be necessary for any other Bank to be joined as an additional party in any proceedings for such purpose." Id. at 631. This right to proceed individually without the joinder of other creditors was reiterated throughout the agreement. In addition, that agreement strictly limited the power of the agent, expressly providing that the agent "shall not in any event be required to bring any suit, action or proceeding arising out of or in connection" with the agreement. Id. (quotation omitted). Unlike in the instant case, the court found that there was no overall design of unified action.

Finally, Million Air Corp. v Republic of Argentina (2005 WL 2656126 [SD NY 2005]) [*9]also is distinguishable. The standing issue in that case was decided on completely different grounds the issue was whether the plaintiff, who was not a registered holder of the bond, could sue on the debt. Million Air Corp. v Republic of Argentina, 2005 WL 2656126, at *2. The debtor waived its standing objections, because the plaintiff had demonstrated that it acquired its beneficial interest during the relevant time period. On the separate issue of acceleration of the principal, the court found that the default provision in the loan agreement specifically stated that "each holder" could give notice and declare the principal immediately due and payable. Thus, it concluded that the plaintiff had effected acceleration. Here, in contrast, section 4 of the Keep-Well Agreement, under which Beal is suing, makes no mention of each lender's rights, but, instead, refers to sections 8.2 and 8.3 of the Credit Agreement, which as already discussed, only give the Administrative Agent, upon direction of the Required Lenders, the right to accelerate and pursue default remedies. The provisions in the Keep-Well Agreementy quoted by Beal, which provide language referring to actions by the Administrative Agent and "any Lender," are general provisions stating that the Sponsors waive certain defenses and rights, and fail to create an individual right of action for a default under the Credit and Keep-Well Agreements.

Accordingly, it is

ORDERED that the defendants' motion to dismiss the complaint is granted and the complaint is dismissed with costs and disbursements to defendants as taxed by the Clerk of the Court; and it is further

ORDERED that the Clerk is directed to enter judgment accordingly.

Dated: __________________________

ENTER:

__________________________

J.S.C. Footnotes

Footnote 1:The court notes that both the Keep-Well and Credit Agreements contain New York forum and choice of law provisions. Keep-Well Agreement, § 18 (h) & (i); Credit Agreement, §§ 10.14, 10.9.