The opinion of the court was delivered by: Denise Cote, District Judge
This Opinion addresses a motion for summary judgment filed in this interpleader action. Certain Participating Lenders*fn1 in a credit agreement -- interpleader-defendants here -- claim the exclusive right to $648,782.13 in proceeds (the "Disputed Proceeds") from the sale of the borrower's assets, which constituted the collateral under the credit agreement. On September 18, 2009, the Participating Lenders filed this motion for summary judgment seeking distribution of the Disputed Proceeds, now held in the Court's Registry. The motion is opposed by another Lender and interpleader-defendant, Wayzata Opportunities Fund II, L.P. ("Wayzata"). The motion became fully submitted on October 16. For the following reasons, the motion is granted.
The following facts are undisputed unless otherwise noted. In a credit agreement dated as of January 31, 2006 (the "Credit Agreement"), the Participating Lenders and other Lenders*fn2, including Wayzata, agreed to make loans to a company now known as Propex Fabrics, Inc. ("Propex").*fn3 Interpleader-plaintiff BNP Paribas ("BNP"), in addition to being a Lender, was appointed Administrative Agent pursuant to section 9.1 of the Credit Agreement.*fn4 In the aggregate, Lenders loaned approximately $230 million to Propex under the Credit Agreement. Section 10.2 of the Credit Agreement provides that, among other expenses, Propex must pay the fees and expenses incurred by the Administrative Agent and Lenders in enforcing any obligations*fn5 under the Loan Documents. Section 10.2(ix) states that Propex shall pay:
[A]ll costs and expenses, including reasonable attorneys' fees..., fees, costs and expenses of accountants, advisors and consultants and costs of settlement, incurred by Administrative Agent and Lenders in enforcing any Obligations of or in collecting any payments due from any Loan Party hereunder or under the other Loan Documents (including in connection with the sale of, collection from, or other realization upon any of the Collateral or the enforcement of the Loan Documents) or in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings. (Emphasis added.)
On January 18, 2008, Propex filed for bankruptcy protection, which constituted an Event of Default under the Credit Agreement. In early 2009, the bankruptcy court approved a "stalking horse" bid procedure for the sale of Propex's assets, which constituted the collateral under the Credit Agreement. The bankruptcy court used a $61.56 million bid for Propex's assets by certain entities controlled by Wayzata as the stalking horse bid. On March 18, 2009, the Participating Lenders filed a conditional objection in the bankruptcy court to the proposed sale, arguing, inter alia, that the $61.56 million bid would result in the sale of Propex's assets -- the Lenders' collateral -- for less than their liquidation value and that the bid would likely be adjusted downward to approximately $36 million.*fn6 In connection with the filing of their conditional objection, the Participating Lenders incurred fees and expenses, including attorneys' fees, totaling $648,782.13.*fn7 These fees and expenses, i.e., the Disputed Proceeds, are the object of the instant interpleader action.
At a bankruptcy court-approved auction for Propex's assets held on March 23, 2009, entities controlled by Wayzata submitted a successful fixed bid of $82 million. The Participating Lenders submitted an unsuccessful bid of approximately $81 million. Following the auction, the Participating Lenders withdrew their conditional objection to the sale of Propex's assets. The sale closed on April 27.
In a letter dated April 24, 2009, the Participating Lenders requested that BNP, as Administrative Agent, pay the fees and expenses incurred in connection with the filing of the conditional objection during the bankruptcy auction of Propex's assets pursuant to section 10.2(ix) of the Credit Agreement.
The letter noted that Participating Lenders only sought payment for fees and expenses incurred in connection with the enforcement of Obligations and not those incurred in connection with their unsuccessful bid for Propex's assets.*fn8 BNP declined. In late April, following the receipt of the proceeds from the sale of Propex's assets, BNP made final pro rata distributions to the Lenders, but withheld the Disputed Proceeds.
By letter dated May 15, 2009, the Participating Lenders notified BNP that they had amended section 2.4(D) of the Credit Agreement, which governs the order in which the Administrative Agent is to distribute the proceeds from the sale of Propex's assets (the "May 15 Amendment").*fn9 The May 15 Amendment inserted a provision to require a priority distribution by the Administrative Agent of "Enforcement Fees and Expenses referenced in the April 24 Letter, and such other fees and expenses incurred by one or more of the Participating Lenders' enforcement of the Obligations." Such enforcement fees and expenses were to be paid after the Administrative Agent paid its own fees and expenses, but before any other distributions. The Participating Lenders contend that they held more that 50% of the aggregate loans outstanding under the Credit Agreement*fn10, and thus comprised the "Requisite Lenders" whose consent was necessary to make the May 15 Amendment.*fn11
Despite the May 15 Amendment, BNP still did not pay the enforcement fees and expenses as requested by the Participating Lenders. On June 9, BNP filed this interpleader action pursuant to 28 U.S.C. § 1335, requesting that the Court resolve the distribution of the Disputed Proceeds. On June 17, BNP deposited $648,782.13, the amount of the Disputed Proceeds, into the Court's Registry. On September 18, the Participating Lenders filed a motion for summary judgment seeking an order instructing BNP to distribute all of the Disputed Proceeds to them.*fn12 Wayzata filed an opposition on October 9 in which it argues, inter alia, that section 10.2(ix) does not authorize payment of the enforcement fees and expenses sought by the Participating Lenders and that the May 15 Amendment is invalid.
Instead, Wayzata seeks pro rata distribution to all Lenders of the Disputed Proceeds.
Summary judgment may not be granted unless all of the submissions taken together "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see SCR Joint Venture L.P. v. Warshawsky, 559 F.3d 133, 137 (2d Cir. 2009). The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination, the court must view all facts in the light most favorable to the non-moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Roe v. City of Waterbury, 542 F.3d 31, 35-36 (2d Cir. 2008). When the moving party has asserted facts showing that the non-movant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on the "mere allegations or denials" contained in the pleadings. Fed. R. Civ. P. 56(e); Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). That is, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Electric Indus. Co. v. Zenith Radio ...