plaintiffs , held approximately 10 % of the issued and outstanding 10.50 % notes . The 2019 indenture contained a hierarchy of consent rights governing the 10.50 % notes , including :
� Sections requiring the consent of a simple majority of noteholders , such as " direct [ ing ] the time , place and method of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it " or otherwise waiving an event of default under the 2019 indenture ;[ 2 ]
�
Actions requiring a two-thirds vote of holders of the 10.50 % notes , including " releasing all or substantially all of the collateral from the Liens securing the Notes ;"[ 3 ] and
� Certain " sacred rights " requiring the consent of each affected holder of the 10.5 % notes , including any change " dealing with the application of proceeds of Collateral that would adversely affect the Holders ."[ 4 ]
In February 2021 , TPC issued separate tranches of $ 153 million and $ 51.5 million in new notes due 2024 each with an interest rate of 10.875 %. Each tranche was secured by the same collateral securing the 10.50 % notes , but with a lien senior to that securing the 10.50 % notes .
Importantly , the holders of the 10.875 % notes also held a supermajority — more than 67 % — of the 10.50 % notes and did not sell their share of the 10.50 % notes back to TPC . The plaintiffs , however , were not issued any of the 10.875 % notes .
The debtors filed for bankruptcy on June 1 , and immediately sought approval of entry into a debtor-inpossession , or DIP , financing loan with the holders of the 10.875 % notes .
The proposed DIP consists of $ 85 million in new money and a rollup of the $ 238 million outstanding under the 10.875 % notes — such rollup being largely a belt-and-suspenders provision if the 10.875 % notes were indeed already senior to the 10.50 % notes .
The plaintiffs filed a complaint against TPC seeking a declaratory judgment that the 10.875 % notes were junior to the 10.50 % notes , and the bankruptcy court agreed to an expedited schedule to hear summary judgment motions prior to a scheduled July 15 final hearing on the DIP , which was subsequently adjourned .
The bankruptcy court heard oral argument from the parties on June 29 , and the bankruptcy court issued its memorandum opinion on July 6 .
In the opinion , the bankruptcy court made clear that the lien subordination dispute was a contractual issue governed by New York state law .[ 5 ] The bankruptcy court was also quick to distinguish the uptier financing at issue from other more " aggressive " transactions in which lenders or noteholders in the subsequent transaction sell their loans back to the debtors and exit their junior tranche .[ 6 ]
Ultimately , the bankruptcy court denied the plaintiffs ' summary judgment motion and held the 10.50 % notes could be subordinated to the 10.875 % notes because the sacred rights that required unanimous consent of all affected holders of 10.50 % notes did not expressly include lien subordination .
Specifically , the bankruptcy court found that the issuance of the 10.875 % notes comported with the