Better Health has closed the second phase of its potentially precedent-setting post-Serta liability management exercise with additional holders of its term loan who were neither in an an initial ad hoc group nor in a second tier priority group, according to sources.

The Fifth Circuit appellate court Serta Simmons decision caused Better Health, an ad hoc group of lenders, and their respective advisors to scramble, and ultimately turn to a different structure 9fin has dubbed the “extend and exchange”. This workaround involved extending certain lenders loan maturities to have the effect of creating a new “class” which would place these lenders outside the scope of the pro rata sharing provisions.