“Commits to Raise” Means What It Says: The First Department Affirms a $15.9 Million Alternative Financing Premium

Aurelius Capital Master Ltd. v Hertz Intl. Ltd.

2026 NY Slip Op 05369

September 22, 2026

Appellate Division, First Department

Renwick, P.J.

Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.

This decision is uncorrected and subject to revision before publication in the Official Reports.

Aurelius Capital Master Ltd., et al., Plaintiffs-Respondents-Appellants,

v

Hertz International Limited et al., Defendants-Appellants-Respondents.

Supreme Court, Appellate Division, First Judicial Department

Decided and Entered: September 22, 2026

Index No. 654710/21|Appeal No. 6574|Case No. 2025-00690|

Dianne T. Renwick

David Friedman Barbara R. Kapnick Bahaati E. Pitt-Burke Kelly O'Neill Levy

White & Case LLP, New York (Laura Garr, Sylvia Precht and Lauren Crane of counsel), and White & Case LLP, Chicago, IL (Jason N. Zakia of the Bar of the State of Florida and State of Illinois, admitted pro hac vice, of counsel), for appellants respondents.

Pallas Partners (US) LLP, New York (Duane L. Loft, Joshua A. Naftalis and Ashley B. Mullen of counsel), for respondents-appellants.

Defendants appeal and plaintiffs cross-appeal from a judgment of the Supreme Court, New York County (Jennifer Schecter, J.), entered January 16, 2026, which, after a nonjury trial, awarded judgment in favor of plaintiffs and against defendants in the total amount of $15,899,653.51, and bringing up for review an order (denominated a decision), same court and justice, entered October 22, 2024, finding that plaintiffs were entitled to payment of a fee from defendants, and so much of an order, same court and Justice, entered November 12, 2024, as declined to award costs and attorneys' fees to plaintiffs.

Renwick, P.J.

[*1]

Plaintiffs, holders of unsecured notes issued by defendant Hertz Holdings Netherlands B.V. (HHN), commenced this breach of contract action seeking payment of an Alternative Financing Premium (AFP) under a Backstop Agreement executed during Hertz's COVID-19-era financial distress. After a nonjury trial, Supreme Court found that defendants triggered the AFP (which became due upon the procuring of the alternative financing) when, before the Backstop Agreement expired, they took affirmative steps toward securing alternative financing, even though the final commitment for the financing occurred after the deadline. The court rejected defendants' argument that a binding financing commitment was required. It also held that plaintiffs were not entitled to attorneys' fees under the Agreement's indemnification clause. Both sides appeal. For the reasons explained below, we find that Supreme Court correctly interpreted the Backstop Agreement regarding the AFP fee and indemnification of attorneys' fees.

Procedural and Factual Background

Defendants HHN and Hertz International Ltd. (HIL) are European subsidiaries of The Hertz Corporation (THC), a global rental car business based in the United States. In September 2016 and March 2018, HHN issued unsecured notes in the principal amount of €750 million. Plaintiffs held the majority of the unsecured notes.

When the COVID-19 pandemic occurred, THC's business suffered, which caused THC and its US subsidiaries to file a chapter 11 bankruptcy petition in May 2020, becoming the US debtors in the bankruptcy proceedings. Although neither HHN nor HIL was a party to the bankruptcy petition, it affected them because certain of the US debtors had guaranteed the HHN notes, and the guarantors' bankruptcy filing was an event of default under the notes.

At the time of THC's filing of the bankruptcy petition, HHN's and its subsidiaries faced a severely strained liquidity position, and they had an urgent need for €250 million to enable them to re-fleet in April 2021. Defendants had no viable alternative lenders other than plaintiffs. Absent plaintiffs' financing, the parent company, THC, believed that defendant HHN and its subsidiaries would likely have to file insolvency or bankruptcy proceedings in Europe.

Accordingly, instead of accelerating the notes due to THC's bankruptcy, plaintiffs agreed to temporarily waive this event of default while the parties negotiated a restructuring and financing plan. Ultimately, the parties settled on the concept of bifurcating the guarantee claims from the HHN notes and selling them at auction. The auction proceeds would then be used to partially pay down the HHN notes before they were exchanged into new notes issued by HIL. Plaintiffs agreed to stand as backstop parties, agreeing to purchase any unsold HIL notes.

[*2]

The resulting framework comprised two related agreements. First, on November 30, 2020, plaintiffs, defendants, THC, and numerous affiliates of THC, which are not parties to this action, entered into a Lock-up Agreement (LUA). The LUA is governed by English Law. Both sides agree that:

"The LUA contemplated: (a) the issuance of €250,000,000 of new notes . . . by HIL to subscribing holders of HHN Notes; (b) the seeking of an order for the allowance of an unsecured claim against the U.S. Debtors as guarantors of the HHN Notes, in an amount equal to the outstanding amount of the HHN Notes, which would be bifurcated from the HHN Notes and sold through an auction to qualified investors. The sales proceeds would be paid to the holders of HHN Notes . . . ; (c) the exchange of the HHN Notes (after the application of the sale proceeds) for two series of new notes to be issued by HHN; and (d) to implement certain of these steps through a scheme of arrangement under English law."

The LUA contained various "Transactions Milestones," culminating with the sale of the US Guarantees by February 12, 2021. One Milestone was that the US debtors were supposed to obtain a Bifurcation Order by January 15, 2021. By its terms, the LUA expired on March 31, 2021. On the same day the LUA was executed, in accordance with the LUA, Hertz UK Receivables Ltd – an indirect subsidiary of defendants and Hertz USA – commenced a scheme of arrangement in the United Kingdom.

Additionally, on November 30, 2020, plaintiffs and defendants entered into a Backstop Agreement, which is governed by New York law and also expired on March 31, 2021. As backstop providers, plaintiffs agreed that if other holders of HHN notes failed to subscribe for their pro rata share of the new HIL notes, they would buy those notes so that HIL would get the full €250 million it planned to raise. Clause 3(b) of the Backstop Agreement states:

"If, on or prior to the Restructuring Effective Date, HIL and/or [HHN] (or any of their . . . affiliates) . . . raises, or commits to raise, any new debt or equity financing from any Alternative Financing Provider in lieu of issuing all or any portion of the New HIL Notes . . . , then [plaintiffs] shall be entitled to a premium (the [AFP]) equal to 5.000% of the aggregate principal amount of such Alternative Financing . . . The [AFP] shall be payable to [plaintiffs] in cash on the closing date of such Alternative Financing (provided that the [AFP] shall not be payable . . . if any condition to the occurrence of the Restructuring Effective Time under the [LUA] can no longer be satisfied other than . . . as a result of a failure of [defendants] to comply with their obligations under this . . . Agreement or the [LUA]) as a result of which it will no longer be possible to implement the Scheme Transaction."

[*3]

The first five Transaction Milestones under the LUA were satisfied. However, after THC moved for the Bifurcation Order, the creditors opposed it in U.S. Bankruptcy Court. With plaintiffs' consent, THC postponed the return date of the motion to try to overcome the creditors' opposition. Without plaintiffs' consent, THC further postponed the return date to February 24, 2021, then to March 17, 2021, and then to April 16, 2021.

On March 29, 2021, the U.S. debtors – namely, THC – requested an order authorizing them to enter into an Equity Purchase and Commitment Agreement (the EPCA motion). This motion revealed that the U.S. Debtors were negotiating with two potential plan sponsors. The U.S. debtors said, "[a]t this point, neither of the plan sponsor groups has made a legal and binding commitment to a final deal." However, both groups' proposals included "funding by the plan sponsor of a new facility . . . to be issued by . . . HIL in mid to late April 2021 to fund the Debtors' European business." The facility would be in the amount of €250 million. The U.S. debtors explained in their March 29, 2021 motion that "both groups of potential plan sponsors have indicated that they would provide the HIL Facility and that they would likely repay such financing on the effective date of the Plan with proceeds from the Debtors anticipated term loan exit financing" and "the HIL Facility would be made in connection with the European Restructuring." The motion further explained that "the Debtors and their non-Debtor European affiliates have determined that new funding from [plaintiffs] likely would not be necessary." With this understanding, plaintiffs terminated the LUA on March 30, 2021.

On April 3, 2021, defendant HIL executed a commitment letter to finance a €250 million facility. Defendant, however, did not receive the financing until April 30, 2021.

In July 2021, plaintiffs commenced this action alleging a single cause of action for breach of contract based on defendants' breach of section 3(b) of the Backstop Agreement by failing to pay the AFP fee. Plaintiffs sought both damages and attorneys' fees pursuant to the indemnification provision of the Backstop Agreement. In March 2024, a nonjury trial was conducted over three days, during which both plaintiffs and defendants called fact witnesses as to the events described above. They also called expert witnesses who provided conflicting opinions as to whether the Scheme Transaction could be implemented legally under English law absent the Bifurcation Order.

The trial court concluded that defendants committed to raise Alternative

Financing from Chapter 11 plan sponsors before March 31, 2021, when the Backstop

[*4]

Agreement would otherwise expire. The trial court agreed with plaintiffs that the phrase "commits to raise" in clause 3(b) of the Backstop Agreement means what it says: that the term "commits" did not require defendants to enter into a binding agreement or a contract for Alternative Financing to trigger their obligation to pay the AFP. The trial court also found that defendants had not met their burden of establishing the "impossibility" exception to defendants' AFP obligation. Among other things, the trial court rejected defendants' claim that it was no longer possible to implement the Scheme Transaction, even if the Bifurcation Order was no longer capable of being satisfied. In reaching this determination, the court credited plaintiffs' expert over defendants' expert on the issue of whether it would still be possible to implement the Scheme Transaction.

This appeal and cross-appeal ensued. Defendants appeal the award of APF fees, while plaintiffs cross-appeal the denial of an award of prevailing-party attorneys' fees.

Discussion

A. The AFP Obligation

In their appeals, defendants essentially argue that the trial court's finding that plaintiffs were entitled to an AFP fee was based on an erroneous interpretation of section 3(b) of the Backstop Agreement.

Contract interpretation is a question of law subject to de novo review (see W.W. W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]; Duane Reade, Inc. v Cardtronics, LP, 54 AD3d 137, 140 [1st Dept 2008]). A complete, clear, and unambiguous agreement must be enforced according to its plain terms (see Greenfield v Philles Records, 98 NY2d 562, 569 [2002]; Lopez v Fernandito's Antique, 305 AD2d 218, 219 [1st Dept 2003]). Courts seek the parties' reasonable expectations, giving words their fair meaning in context (see Sutton v East Riv. Sav. Bank, 55 NY2d 550, 555 [1982]; Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 NY2d 397, 400 [1977]).

Interpretation of "Commits to Raise"

Here, pursuant to Section 3(b) of the Backstop Agreement, plaintiffs were entitled to the AFP fee if prior to the expiration of the agreement, defendant HIL (or its affiliates) "raises, or commits to raise, any new debt or equity financing from any Alternative Financing Provider in lieu of issuing all or any portion of the New HIL Notes." The phrase "commits to raise" is defined neither in the Backstop Agreement nor in the LUA. "[T]he lack of a definition does not, in and of itself, mean that the word must be ambiguous" (Slattery Skanska Inc. v American Home Assur. Co., 67 AD3d 1, 14 [1st Dept 2009]). When a word is not defined in a contract, "it is common practice for the courts of this State to refer to the dictionary to determine the plain and ordinary meaning of words to a contract" (Lend Lease [US] Constr. LMB Inc. v Zurich Am. Ins. Co., 136 AD3d 52, 57 [1st Dept 2015] [internal quotation marks omitted], affd 28 NY3d 675 [2017]).

[*5]

Defendants argue that the term "commit" connotes a binding agreement or obligation (to obtain financing from a third party), as indicated in various dictionaries. That, of course, is not the only dictionary meaning. Plaintiffs rely upon the Cambridge Online Dictionary definition of "commit," which means "to promise or give your loyalty to . . . a plan of action." Cambridge Business English dictionary provides both definitions, when it defines the verb "to commit," in a business context, as referring to a promise that something will happen or a decision to use resources for a specific purpose.

That there are various definitions of the word "commit" does not mean that its use is inherently ambiguous. Even if dictionary definitions conflict, a court can still determine "the plain meaning of" a word (Slattery Skanska Inc., 67 AD3d at 14-15). When considered in isolation and without reference to the context, almost any word can be ambiguous, which is why courts must review the context in which a term appears, both at the sentence level and the level of the contract as a whole, to determine whether it is ambiguous (see Kass v Kass, 91 NY2d 554, 566 [1998]; W.W.W. Associates, Inc., 77 NY2d at 162-163; see also Global Reins. Corp. of Am. v Century Indem. Co., 22 F4th 83, 94-95 [2d Cir 2021]). Thus, the construction of the sentence in which a word is used, the subject of the sentence or section of the contract, and the purpose of the contract as a whole all provide important context that can narrow the definitions that might apply and can render a word or phrase unambiguous (see Kass, 91 NY2d at 566).

Applying these principles, we find defendants' interpretation untenable when read within the contract's structure. The phrase "raises or commits to raise" is disjunctive. If "commit" required a binding agreement, "raise" would become surplusage. Reading the contract in this way violates the principle that contracts must be interpreted to give effect to all terms (see Corhill Corp. v S.D. Plants, Inc., 9 NY2d 595, 599 [1961]; Trump—Equitable Fifth Ave. Co. v HRH Constr. Corp., 106 AD2d 242, 244 [1st Dept 1985], affd 66 NY2d 779 [1986]).

The more coherent interpretation is that "commit to raise" encompasses significant affirmative steps toward securing alternative financing—even if not yet reduced to a binding agreement—so long as those steps reflect a defined intent to pursue the financing in lieu of the HIL notes. This interpretation aligns with the Backstop Agreement's purpose: defendants could pursue cheaper financing but had to pay plaintiffs the AFP for assuming substantial risk in facilitating that restructuring path. The financing ultimately obtained was indeed cheaper even after accounting for the AFP. "Since a contract is a voluntary undertaking, it should be interpreted to give effect to the parties' reasonable expectations" (see Sutton, 55 NY2d at 555).

[*6]

If, as defendants suggest, the parties, which are commercially sophisticated entities, intended that entering into a binding agreement (orally or written) with a third-party lender or investor, prior to the ending of the Backstop Agreement, was an absolute requirement for triggering the duty to pay an AFP, they could have easily expressed their intent by using language of a binding promise. That the parties chose the term "raises or commits to raise," rather than a binding promise, is a clear manifestation of an intent to trigger a duty to pay an AFP once defendants took affirmative steps to procure alternative financing prior to the expiration of the Backstop Agreement. Any other reading would impermissibly disregard the clear and unequivocal meaning given to the terms by the parties.

The dissent's interpretation of the "raises or commits to raise" term of the Backstop Agreement cannot be reconciled with the contractual text or with basic principles of contract construction. Its analysis isolates individual words from their operative context and, in doing so, collapses the distinctions the parties clearly intended to draw.

To begin, the dissent's premise—that reading "commit to raise" as something less than a binding agreement renders "to raise" meaningful but not redundant—is contradicted by the structure of section 3(b). The Backstop Agreement uses "commits to raise" and "raises" in the disjunctive, making either event sufficient to trigger payment upon the procurement of alternative financing. The dissent's interpretation would invert that structure: if "commit to raise" required a binding financing agreement, then "raises" would always be satisfied afterward, depriving "raises" of independent effect. Contract interpretation requires giving meaning to all terms (see Nomura Home Equity Loan, Inc., Series 2006-FM2 v Nomura Credit & Capital, Inc., 30 NY3d 572, 581 [2017] [a contract should be read as a "harmonious and integrated whole," and each and every part should be given effect because a court should not leave any provision "without force and effect"]; MAK Tech Holdings Inc. v Anyvision Interactive Tech, LTD, 42 NY3d 570, 576 [2024] ["courts must give meaning to every word whenever possible to avoid rendering provisions meaningless"]; see also IKB Intl., S.A. v Wells Fargo Bank, N.A., 40 NY3d 277, 288 [2023]). The majority's reading does so by maintaining the functional distinction: "raises" refers to the actual receipt of funds, while "commits to raise" refers to significant, concrete steps to secure alternative financing in place of the HIL issuance.

[*7]

The dissent relies heavily on dictionary definitions, but dictionaries do not control where, as here, a term appears in a defined transactional context and serves a specific functional role. Section 3(b) provides that plaintiffs are entitled to the AFP if defendants "raise, or commit to raise" alternative financing before March 31. The phrase is written in the disjunctive, requiring that each component retain independent meaning. Construing "commit" narrowly to require a binding financing obligation collapses the disjunctive structure by ensuring that "raises" would always be satisfied only after "commits to raise," thus depriving "raises" of independent effect. This approach violates the settled principle that courts must give meaning to every term of a contract (see Matter of Town of Southampton v New York State Dept. of Envtl. Conservation, 39 NY3d 201, 211-212 [2023] [the meaning of a word or phrase cannot be determined in isolation but must be inferred from the context in which it appears]; Matter of Mestecky v City of New York, 30 NY3d 239, 243 [2017] [same]). Had the parties intended to require a binding financing agreement, they knew how to draft one. Their deliberate choice of broader language must be respected.

Contrary to the dissent's assertion, the majority's interpretation does not render "raises" surplusage; rather, it preserves the functional distinction the parties created. "Raises" refers to the actual obtaining of alternative financing. "Commits to raise" refers to substantial affirmative steps taken toward securing such financing before the expiration of the Agreement. The dissent's construction, by contrast, would require a binding agreement for any "commit" to exist. Had the parties intended such a requirement, they could have said so expressly, as they did in section 2(a), where "commitment" denotes an irrevocable obligation. They chose different language in section 3(b), and we must give effect to that choice.

The dissent further improperly imports into section 3(b) the meaning of "commitment" as used in section 2(a). That section uses "commitment" to denote an explicit obligation to purchase HIL notes. In that context, the word necessarily carries the meaning of a binding obligation. But that usage cannot be imported into section 3(b), where the parties employed different terminology for different subject matter. Contextual meaning is not transferable solely because the same root word appears elsewhere in the contract. The dissent's reading erases this distinction and substitutes uniformity for intentional drafting nuance.

[*8]

We also reject the dissent's premise that construing "commits to raise" to include substantial, nonbinding steps creates unworkable ambiguity. Sophisticated restructuring agreements routinely contemplate commitments formed through sequencing of negotiations, term formulations, integrated motions, lender coordination, and the adoption of financing path, long before formal execution. The record reflects just such steps. The debtors' March 29 motion described two sponsor proposals for a €250 million HIL facility to be funded in mid-to-late April, explained the sponsors' financing structures, and stated that plaintiffs' financing "likely would not be necessary." Those representations could not have been made absent coordinated steps evidencing a defined plan to pursue an alternative financing facility. These actions are precisely what the parties intended section 3(b) to capture.

The dissent further contends that reading "commits to raise" broadly renders "raises" nonindependent because, in its view, financing can be raised without first entering into any commitment. That assertion does not reflect commercial reality. Particularly for financing of this magnitude, alternative financing is never obtained in the absence of antecedent commitments, whether through negotiations, formulated proposals, integrated timing assumptions, or agreed mechanisms for disbursement. The record here confirms that the plan sponsors' proposals included specific terms, closing timing, and repayment mechanics tied to exit financing. Even if not yet memorialized in a binding contract, these steps constituted commitments under the parties' chosen language. Thus, the dissent's suggestion that "raises" might occur without any antecedent commitment is theoretical and disconnected from how the financing at issue was actively being pursued. The parties drafted "raises, or commits to raise" to ensure that substantive movement toward alternative financing, whether or not memorialized in an executed instrument, would trigger the AFP. "Raises" therefore does not cure the dissent's attempted narrowing of "commit"; rather, it confirms the breadth of the provision by covering both the achievement of financing and the substantial steps leading to it.

[*9]

Against this backdrop, the trial evidence demonstrated that defendants had committed to securing alternative financing before April 1, 2021, within the meaning of the Backstop Agreement. On March 24, 2021, the U.S. debtors circulated to prospective lenders a term sheet for new financing that they represented would be less costly than plaintiffs' proposal. The next day, one lender agreed to provide such financing. Shortly thereafter, the U.S. debtors filed a disclosure statement and a motion seeking authorization to enter into an Equity Purchase and Commitment Agreement, attaching the March 25 term sheets and stating that HIL would obtain a €250 million facility from new lenders. On the morning of March 30, those lenders transmitted executed equity commitment letters for the HIL financing to the U.S. Debtors' counsel, White & Case. That same day, defendants' financial advisor at FTI Consulting wrote that "the original Eurobond LUA is no longer relevant." Collectively, defendants' late-March actions in securing agreements from new lenders, publicly disclosing the financing arrangements, and obtaining signed term sheets and commitment letters constitute a commitment to obtain alternative financing, even under the dissent's narrow dictionary definitions, which describe an "agreement to do something in the future" or "undertak[e] to do something."

Impossibility Exception

Defendants alternatively argue that even if the term "commit" does not require them to execute a binding agreement to obtain financing from a third-party lender or investors, they still did not have to pay the AFP because the AFP "impossibility" exception in the agreement was triggered by THC's failure to obtain a Bifurcation Order from the bankruptcy court by the restructuring effective date (January 15, 2021). We disagree.

As the relevant section 3(b) of the Backstop Agreement states, defendants were exempt from paying the AFP in the following factual scenario:

"[T]he [AFP] shall not be payable . . . if any condition to the occurrence of the Restructuring Effective Time under the [LUA] can no longer be satisfied (other than . . . as a result of a failure of [defendants] to comply with their obligations under this . . . Agreement or the [LUA]) as a result of which it will no longer be possible to implement the Scheme Transaction."

[*10]

Defendants correctly point out that the evidence adduced at trial established that a condition to the occurrence of the Restructuring Effective Time could not be satisfied once THC failed to obtain a bifurcation order by January 15, 2021. Likewise, the evidence also supports defendants' contention that THC's failure to obtain such an order was not a failure by defendants to comply with their contractual obligations. However, we disagree with defendants in their interpretation of the AFP exception – namely, that it was automatically triggered by THC's failure to obtain a bifurcation order. This interpretation fundamentally conflicts with the plain language of the AFP exception which requires both: (1) that any condition to the occurrence of the Restructuring Effective Time under the [LUA] can no longer be satisfied and (2) that as a result of such failure it will no longer be possible to implement the Scheme Transaction.

Although defendants established the first element, the trial court reasonably found that the Scheme Transaction remained legally feasible. Plaintiffs' English-law expert testified that a scheme could still be implemented without the Bifurcation Order, and that restructurings routinely adapt when circumstances change. The court credited that testimony over defendants' expert. Such credibility determinations are entitled to deference (see National Auditing Servs. & Consulting, LLC v 511 Prop, LLC, 211 AD3d 609, 610 [1st Dept 2022]) and was supported by a fair interpretation of the evidence (see Thoreson v Penthouse Intl., 80 NY2d 490, 495 [1992]; DeGraw Constr. Group, Inc. v HPDC2 Hous. Dev. Fund Co., Inc., 189 AD3d 405, 405 [1st Dept 2020]).

Indeed, plaintiffs' expert's opinion was consistent with the text of the LUA. Under the LUA, the Scheme Transaction is defined as "a transaction pursuant to which the Restructuring or any part thereof may be implemented by way of one or more English law schemes of arrangement under Part 26 of the Companies Act 2006" (see LUA § 1.1[e]). "Restructuring," in turn, is defined as "the financial restructuring of the Group on substantially the terms set out in the Term Sheet, the Steps Plan, the US Guarantee Bifurcation Paper and the Restructuring Documents." Defendants therefore failed to prove the second required prong of the impossibility exception.

[*11]

We are not persuaded by the dissent's analysis of the impossibility exception. It rests on an unduly rigid and textually unsupported reading of both the Backstop Agreement and the LUA. Like defendants, the dissent treats the failure to obtain the Bifurcation Order as automatically defeating the possibility of implementing the Scheme Transaction. But the LUA's definition of "Restructuring" requires substantial—not perfect—alignment with the Term Sheet, the Steps Plan, and the Bifurcation Paper, and the definition of "Scheme Transaction" expressly encompasses the implementation of "any part" of the restructuring through one or more English schemes of arrangement. The dissent's view improperly elevates the Bifurcation Order to a non-waivable condition precedent, even though the contract contains no such designation. By insisting that only the exact restructuring documents contemplated at the outset qualify as a Scheme Transaction, the dissent disregards the LUA's express flexibility and the standard practice of modifying schemes when necessary.

The dissent also disregards the conjunctive nature of the impossibility exception. Section 3(b) excuses payment of the AFP only where a condition to the Restructuring Effective Time cannot be satisfied and it becomes impossible to implement the Scheme Transaction as a result. Even if the first element was met when the Bifurcation Order was not obtained by January 15, 2021, the dissent fails to demonstrate the second: actual impossibility. The trial court, after hearing competing expert testimony on English restructuring practice, credited plaintiffs' expert that a scheme could still proceed without the Bifurcation Order and that restructurings commonly adapt to changed circumstances. That determination constituted a factual finding entitled to deference (see National Auditing Servs., 211 AD3d at 610). The dissent sidesteps this standard by redefining "Scheme Transaction" so narrowly that it excludes any modified scheme, no matter how consistent with the required "substantial" terms.

More fundamentally, the dissent misconceives the nature of English schemes by treating the restructuring architecture as a fixed blueprint rather than a flexible mechanism capable of accommodating changes in timing, structure, and documentation. The LUA itself contemplates implementation through "one or more" schemes, underscoring its procedural adaptability. Nothing in the contractual language elevates the Bifurcation Order to an indispensable element of the Scheme Transaction. On the contrary, the agreements anticipate contingencies and departures from the precise steps outlined, provided the restructuring proceeds on substantially the same terms.

[*12]

The dissent's construction effectively renders the second clause of the impossibility exception meaningless. If failure of any condition automatically satisfies the impossibility requirement, defendants could avoid the AFP merely by pointing to an unmet milestone, regardless of whether the restructuring remained feasible. This outcome violates the rule that contractual language must be interpreted so that all terms have effect (see Beal Sav. Bank v Sommer, 8 NY3d 318, 324 [2007]; God's Battalion of Prayer Pentecostal Church, Inc. v Miele Assoc., LLP, 6 NY3d 371, 374 [2006]). In contrast, the majority's interpretation preserves the parties' bargain by requiring a showing of true impossibility, not simply a deviation from the originally contemplated timeline.

Significantly, the dissent's interpretation frustrates the commercial purpose of the AFP. It would allow defendants to pursue alternative financing, benefit from that pursuit, and then avoid paying the AFP simply because the final binding commitment occurred after March 31, even though defendants had undertaken substantial steps toward the financing beforehand. That would leave backstop providers uncompensated for the risk they assumed and would incentivize strategic delay. The parties plainly did not intend that result.

Finally, contrary to the dissent's assertion, the majority's interpretation of the "commit to raise or raise" term of the Backstop Agreement does not violate the Court of Appeals' admonition in U.S. Bank N.A. v DLJ Mtge. Capital, Inc. (38 NY3d 169, 178 [2022]) that courts may not add or excise terms or distort contractual meaning under the guise of interpretation. Rather, it is the dissent that violates this principle, by relying on isolated definitions, disregarding the contract's architecture, and importing limitations from a separate agreement that the Backstop Agreement does not adopt. The majority's interpretation is the only reading that gives full effect to the text, respects the distinctions the parties drew, and aligns with the Backstop Agreement's economic purpose.

B. Attorneys' Fees

On their cross-appeal, plaintiffs contend they are entitled to prevailing-party attorneys' fees under section 6(a) of the Backstop Agreement's indemnification clause. Clause 6 of the Backstop Agreement is captioned "Indemnification." Subsection (a) says defendants:

"shall . . . indemnify and hold harmless each [plaintiff] . . . from and against all losses, claims, damages, liabilities and costs and expenses . . . that any such Indemnified Person may incur or to which any such Indemnified Person may become subject arising out of or in connection with this . . . Agreement and the transactions contemplated hereby and thereby, including . . . any breach by [defendants] of this . . . Agreement."

[*13]

Subsection (b) sets forth the procedures for indemnification, such as notice from plaintiffs to defendants. Defendants had the right "to assume the defense" of any Indemnified Claims brought against an Indemnified Person.

We conclude that the language of the indemnification provision falls short of satisfying the exacting standard of Hooper Assoc. v. AGS Computers (74 NY2d 487, 491-492 [1989]), which held that for an indemnification clause to cover claims between the contracting parties rather than third-party claims, its language must unequivocally reflect that intent. This "exacting standard," creates a heavy burden (id.; see also Sage Sys., Inc. v Liss, 39 NY3d 27, 31 [2022]), which was not met here.

Indeed, section 6 contains the hallmarks of a standard third-party indemnity: notice requirements, litigation-control provisions, and rights to assume a defense. These structural features mirror those in Hooper and similar cases, which hold that such clauses do not extend to claims between contracting parties (see Hooper, 74 NY2d at 492; Gotham Partners, L.P. v High Riv. Ltd. Partnership, 76 AD3d 203, 206 [1st Dept 2010], lv denied 17 NY3d 713 [2011]). As the Court of Appeals recognized, the inclusion of such provisions makes clear that the indemnity provision applied to third-party claims (see Hooper, 74 NY2d at 492; Gotham Partners, L.P. v High River Ltd. Partnership, 76 AD3d at 206).

C. Conclusion

In sum, we find that Supreme Court correctly held that defendants triggered the AFP fee obligation – which became due upon the procuring of the alternative financing – by committing to raise alternative financing before the Backstop Agreement expired, and that the AFP's impossibility exception did not apply. It also properly denied plaintiffs' request for attorneys' fees.

Considering our determination, we need not reach the parties' remaining arguments for affirmative relief.

Accordingly, the judgment of the Supreme Court, New York County (Jennifer Schecter, J.), entered January 16, 2026, which awarded judgment in favor of plaintiffs and against defendants in the total amount of $15,899,653-51, bringing up for review an order (denominated a decision), same court and justice, entered October 22, 2024, which, after a nonjury trial, found that plaintiffs were entitled to payment of a fee from defendants, and so much of an order, same court and Justice, entered November 12, 2024, as declined to award costs and attorneys' fees to plaintiffs, should be affirmed, without costs.

All concur except Freidman J., who dissents

in part in a separate Opinion.

Friedman, J. (Dissenting In Part)

[*14]

This appeal revolves around the contractual phrase "raises, or commits to raise," alternative financing. This phrase constitutes the trigger for defendants' liability to plaintiffs for a break-up fee of many millions of dollars. The natural meaning of the word "commits" in the phrase in question, as confirmed by numerous legal and general dictionaries and by judicial decisions (as shown below), is to enter into a binding obligation. The majority, however, construes the word "commits" as "to pursue," without citing any dictionary definition, judicial decision, or evidence from the parties' negotiations supporting the unprecedented imposition of this unnatural meaning on the word. Contrary to the majority's claim, their reading of the word "commits" does not avoid any redundancy issue with the word "raises." Moreover, language used elsewhere in the same agreement, and in another agreement that was part of the same transaction, makes it plain that the parties did not intend the meaning imposed by the majority on the word "commits." Finally, the majority's construction of "commits" creates an unworkably amorphous standard for determining whether defendants have incurred a multimillion dollar liability.

Even if the word "commits" is construed as the majority understands it, the break-up fee provision of the parties' agreement contains an "impossibility" clause that negates liability for the break-up fee if any condition to the contemplated financing "can no longer be satisfied" without fault of the defendants "as a result of which it will no longer be possible to implement the Scheme Transaction." It is undisputed that an essential condition to the financing could not be satisfied, as a result of which the Scheme Transaction — a defined term referring to the actual deal that the parties made — could not be implemented. It is also undisputed that defendants are not at fault for this result. Nonetheless, the majority finds that the "impossibility" clause is not implicated by treating the term "Scheme Transaction" — in spite of its definition — as a reference to any hypothetical alternative deal, with terms and conditions different from those the parties actually agreed to, that might have achieved the same ultimate result. Under this reading, the "impossibility" clause is rendered a nullity and could never have any effect, contrary to the basic principles of contractual construction.

For the foregoing reasons, as more fully explained below, I would reverse the judgment appealed from and grant judgment to defendants dismissing the complaint. Accordingly, I respectfully dissent from the majority's affirmance of the judgment for plaintiffs.

[*15]

I begin my analysis with a brief review of the background facts. Nonparty The Hertz Corporation (THC) is the parent of the global Hertz rental car business. Defendant Hertz International Limited (HIL), a subsidiary of THC, is the parent of defendant Hertz Holdings Netherlands, B.V. (HHN), the Netherlands-incorporated holding company of the Hertz businesses operating in Europe and Australia.

HHN issued two series of unsecured notes, due in 2021 and 2023, respectively, in the aggregate principal amount of €725 million (the HHN Notes), which were guaranteed by THC and certain of its affiliates in the United States. Plaintiffs are holders of the majority of the HHN Notes.

In May 2020, as a result of a decline in the car rental business due to the COVID-19 pandemic, THC and certain other affiliated guarantors of the HHN Notes filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the District of Delaware. Although HIL and HHN (collectively, defendants) were not parties to the bankruptcy proceeding, the Chapter 11 filing by the guarantors of the HHN Notes constituted events of default under the terms of those notes. In addition, HHN faced cash flow difficulties of its own as a result of the pandemic and required a substantial infusion of cash by April 2021, when it was scheduled to replace its vehicle fleets, if it were to avoid insolvency.

During 2020, plaintiffs (who waived through year-end the events of default arising from the bankruptcy), defendants and THC negotiated a restructuring of HHN's financing. The negotiations culminated in two agreements, both executed on November 30, 2020, known as the Lock-Up Agreement (LUA) and the Backstop Agreement.

In summary, the LUA provided for:

the issuance by HIL of €250 million of new notes (the New HIL Notes) to subscribing (i.e., purchasing) holders of the HHN Notes (thereby providing HHN with the needed cash infusion), with the New HIL Notes to be offered to the holders of HHN Notes on a pro rata basis;

THC's seeking in the United States bankruptcy proceeding an order (1) allowing an unsecured claim against itself and the other debtors as guarantors of the HHN Notes in an amount equal to the amount outstanding under those notes, (2) bifurcating the claim under the guarantee from the HHN Notes themselves, and (3) permitting the sale to qualified investors by auction of the bifurcated guarantee claim, with the sale proceeds to be paid to the holders of the HHN Notes to reduce the amount owed thereunder (the Bifurcation Order);

the exchange of the HHN Notes (after application to the amount owed of the proceeds of the sale of the guarantee claims) for two series of new notes to be issued by HHN (the New HHN Notes); and

the implementation of the foregoing steps through a "Scheme of Arrangement," a proceeding in an English court to obtain approval of the restructuring of a company's debt that will be binding on all creditors.

[*16]

The LUA provided that all steps of the restructuring would be completed by March 31, 2021, and set forth a timeline for completion of the major steps in advance of that date. The timeline provided that the Bifurcation Order should be obtained from the bankruptcy court by January 15, 2021. Absent an extension, the LUA was set to terminate automatically on March 31, 2021.

The Backstop Agreement, to which plaintiffs and defendants are the sole parties, provided that, to the extent other holders of the HHN Notes did not subscribe for their pro rata shares of the New HIL Notes, plaintiffs would purchase the unsubscribed New HIL Notes so that HIL would receive the full €250 million it planned to raise. The Backstop Agreement provided for plaintiffs to receive a fee for filling this backstopping function should the restructuring be consummated as contemplated by the LUA.

Further, the parties' rights and obligations in the event of defendants' ultimately obtaining alternative financing are addressed by section 3(b) of the Backstop Agreement, which provides in pertinent part:

"If, on or prior to [March 31, 2021], HIL or [HHN] (or any of their respective affiliates) . . . raises, or commits to raise, any new debt or equity financing from any Alternative Financing Provider in lieu of issuing all or any portion of the New HIL Notes (. . . an 'Alternative Financing'), then [plaintiffs] shall be entitled to a premium (the 'Alternative Financing Premium') equal to 5.000% of the aggregate principal amount of such Alternative Financing . . . . The Alternative Financing Premium shall be payable to [plaintiffs] in cash on the closing date of such Alternative Financing (provided that the Alternative Financing Premium shall not be payable . . . if any condition to the occurrence of the Restructuring Effective Time under the [LUA] can no longer be satisfied (other than . . . as a result of a failure of [defendants] to comply with their obligations under this New HIL Notes Backstop Agreement or the [LUA]) as a result of which it will no longer be possible to implement the Scheme Transaction" (emphasis added).

Thus, under section 3(b) of the Backstop Agreement, plaintiffs would be entitled to an "Alternative Financing Premium" (AFP) in the event defendants, before March 31, 2021, "raise[d], or commit[ted] to raise," alternative financing in place of the New HIL Notes contemplated by the LUA. However, even if defendants "raise[d], or commit[ted] to raise" alternative financing within that time frame, they would not be liable for the AFP if, without their fault, "any condition to the occurrence of the Restructuring . . . c[ould] no longer be satisfied . . . as a result of which it w[ould] no longer be possible to implement the Scheme Transaction." The term "Scheme Transaction" is defined in the relevant documents, as discussed below.

[*17]

Critically, it is undisputed that all the steps required to implement the restructuring — including the issuance of the New HIL Notes, the exchange of the HHN Notes for the New HHN Notes, and the issuance of the Bifurcation Order — were conditioned upon each other. As stated in the prospectus for the Scheme of Arrangement that was disseminated to defendants' creditors, the foregoing steps were "intended to take effect inter-conditionally . . . in order to [give] effect to the Restructuring." Thus, the LUA provided that

"the process for obtaining the Bifurcation Order and implementing the Sale Procedures [for the guarantee claims] shall be implemented in parallel with the implementation of the [exchange of the HHN Notes for the New HHN Notes] (via an English scheme of arrangement) such that the two processes shall complete simultaneously (and be interconditional), with a target date of early February 2021."

Similarly, the document constituting the Scheme of Arrangement provided, in pertinent part, that "each of the Scheme Creditors acknowledges and agrees that all of the Closing Steps are inter-conditional and if . . . any of the Closing Steps are not completed or have not been waived . . . then the Scheme shall terminate . . . ."

Ultimately, it proved impossible to implement the restructuring as contemplated by the LUA and the Backstop Agreement because, in the face of unanimous opposition from the creditor groups in the THC bankruptcy proceeding (including a creditor group that included certain plaintiffs in this action), THC, after a number of deferrals of the hearing on its motion for a Bifurcation Order, withdrew the motion. On March 29, 2021 (two days before the LUA and the Backstop Agreement were scheduled to expire), THC moved the bankruptcy court for an order permitting it to enter into an Equity Purchase and Commitment Agreement (the EPCA motion). The papers supporting the EPCA motion revealed that THC was negotiating with two potential plan sponsors, "neither of [which] has made a legal and binding commitment to a final deal." The next day (March 30, 2021), plaintiffs terminated the LUA and the Backstop Agreement, alleging that the EPCA motion constituted a breach by THC and defendants.

On April 3, 2021 — three days after the date on which the Backstop Agreement expired by its terms — defendant HIL executed a commitment letter for the financing of a new €250 million credit facility. Defendants did not receive financing from the new facility until April 30, 2021. Thereafter, plaintiffs commenced this action against defendants, asserting one cause of action for breach of the Backstop Agreement. The complaint seeks to recover the AFP pursuant to section 3(b) of the Backstop Agreement, based on the alternative financing that defendants ultimately obtained. The matter is now before us on defendants' appeal from Supreme Court's judgment awarding plaintiffs, after a nonjury trial, recovery of the AFP.FN1

[*18]

Under section 3(b) of the Backstop Agreement, plaintiffs are entitled to the AFP only if both of the following two conditions are satisfied: (1) defendants, on or before March 31, 2021, "raise[d], or commit[ted] to raise," alternative financing; and (2) "any condition" to the effectiveness of the restructuring under the LUA could "no longer be satisfied," without fault on the part of defendants, "as a result of which it [became] no longer possible to implement the Scheme Transaction." I agree with the majority that, given that the relevant facts are essentially undisputed, this inquiry presents a question of contractual interpretation, which we review de novo as a matter of law. However, unlike the majority and the trial court, I conclude that neither of the conditions for entitlement to the AFP has been satisfied. Accordingly, I respectfully dissent from the majority's disposition of the appeal to the extent it affirms the award to plaintiffs of the AFP.

I turn first to the question of whether defendants "raise[d], or commit[ted] to raise," alternative financing within the relevant time frame. In finding that this condition was satisfied, the trial court asserted — without citing any supporting case law, dictionary entries, or evidence from the parties' communications — that the "plain meaning" of the word "committed" was "pursuing and using alternative financing" (emphasis added).FN2 On appeal, the majority relies on the Cambridge Online Dictionary, which defines "commit," in pertinent part, as "to promise or give your loyalty . . . to a particular . . . plan of action." I am not persuaded.

To begin, the Cambridge definition of "commit" as "to promise or give your loyalty" does not support the trial court's reading of the word "commits" to mean merely to pursue. This is shown by the example given with the Cambridge definition: "Once we have committed to this course of action there is no going back" (emphasis added). Plainly, this means a binding, irrevocable choice, which defendants did not make until April 3, 2021. The record shows that, as of March 31, 2021, defendants had simply been engaged in discussions with two potential sponsors of an alternative plan, and had the choice to accept or reject either potential sponsor's offer. The trial court's statement that defendants "had their ducks in a row before the end of March 2021" is contradicted by the fact that, at the time plaintiffs terminated the LUA and the Backstop Agreement, two offers, from two different potential sponsors, were outstanding and still being considered by defendants.

In fact, dictionaries consistently define "commit" as an action that irrevocably binds or obligates a party. Since the Backstop Agreement was negotiated by the parties' respective counsel, it is appropriate to turn first to legal dictionaries and thesauruses. Here are some examples:

[*19]

Ballentine's Legal Dictionary and Thesaurus, 113 (1995), commitment: "The act of binding oneself, pledging, or contracting" (emphasis added).

Black's Law Dictionary (12th ed 2024), commitment: "An agreement to do something in the future, esp. to assume a financial obligation" (emphasis added);

Id., commitment document: "A binding contract, change order, purchase order, letter of intent, or other instrument relating to transactions for goods or services" (emphasis added);

Id., loan commitment: "A lender's binding promise to a borrower to lend a specified amount of money (emphasis added);

Merriam-Webster's Dictionary of Law, 86 (2016), commitment: "an agreement or promise to do something in the future; esp. : a promise to assume a financial obligation at a future date <cannot meet their loan ~s>" (emphasis added).

Burton's Legal Thesaurus, 165 (Lexis 6th ed 2021): commitment (obligation): synonyms include "agreement," "contract," "covenant," "duty," "guaranty," "obligation," "pledge," "promise," and "undertaking."

General dictionaries define "commit" and "commitment" similarly:

Merriam-Webster.com, commit (https://www.merriam- webster.com/dictionary/commit) (to "obligate, bind" and "to pledge or assign to some particular course or use.").

Dictionary.com Unabridged (Random House, Inc.), commit (https://www.dictionary.com/browse/commit) ("to bind or obligate, as by pledge or assurance; pledge" and "to consign for preservation").

American Heritage Dictionary of the English Language (Houghton Mifflin Company), commit (https://ahdictionary.com/word/search.html?q=commit) ("To bind, obligate, or devote, as by a pledge").

Oxford English Dictionary.com, commit (https://www.oed.com/dictionary/commit_v?tab=meaning_and_use# 8745869) ("To record or preserve in writing; to write down," "To obligate or bind [oneself] to a particular course of action, policy, etc.," and "To make a commitment to a course of action, a contract, etc.; to pledge, give an undertaking to do something.").

[*20]

It is also significant that courts generally use forms of the word "commit" to refer to undertaking an obligation or duty (see Graff v Billet, 64 NY2d 899, 901-902 [1985] [a real estate broker was not entitled to commission from the seller where "there was no executed sales contract to be breached, and the seller's mere refusal to enter into one with the broker's prospective buyer (was) not a fault or default of the seller in the absence of any specific commitment by the seller in the brokerage agreement to enter into the sales contract"] [emphasis added; internal quotation marks omitted]; Lindenbaum v Royco Prop. Corp., 165 AD2d 254, 258 [1st Dept 1991] [observing that "the term 'commitment' suggests a binding rather than a qualified obligation" and taking note of a dictionary definition of that term as "an engagement by contract or purchase order to assume a financial obligation" and "(t)he state of being obligated or bound"] [emphasis added; certain internal quotation marks omitted]; Real Estate Economic Resources v Armendariz, 162 AD2d 303, 304 [1st Dept 1990] ["As there was no commitment letter herein, there was no written obligation"] [emphasis added]; see also United States v Agne, 214 F3d 47, 54 [1st Cir 2000] [the federal statute prohibiting false statements made to influence a federally-insured bank's action "upon any . . . commitment" (18 USC § 1014)" is violated by a false statement made to induce a bank to make "a pledge or promise" or to incur an "obligation"] [internal quotation marks omitted]; United States v Tucker, 773 F2d 136, 139 [7th Cir 1985], cert denied 478 US 1022 [1986] [a bank's making itself "obligated to pay Bell upon presentation of the required documents" under a letter of credit was a "commitment" within the meaning of 18 USC § 1014] [emphasis added]; United States v Stoddart, 574 F2d 1050, 1053 [10th Cir 1978] [construing the word "commitment" in 18 USC § 1014 in accord with its dictionary definition as "(a) promise or pledge to do something"] [internal quotation marks omitted]).

In fact, in section 2(a) of the Backstop Agreement — just two pages before the page on which section 3(b) appears — the parties themselves used the word "commitment" to denote an obligation. Section 2(a) provides in pertinent part:

"Subject to the terms and conditions of this New HIL Notes Backstop Agreement, each New HIL Notes Backstop Provider irrevocably agrees to backstop and purchase . . . an aggregate principal amount of Unsubscribed New HIL Notes . . . (such obligation to purchase the Unsubscribed New HIL Notes, the 'New HIL Notes Backstop Commitment')" (emphasis in italics added).

It is implausible that the parties, who had just used the word "commitment" to denote an obligation in section 2(a), would use the word "commits," two pages later in section 3(b) of the same agreement, to mean merely to pursue.

[*21]

Moreover, when the parties wished to prohibit pursuit of an alternative deal, they did so explicitly, as demonstrated by the LUA. Section 4.1(b) of the LUA prohibits the parties from "supporting, negotiating, or preparing any alternative restructuring" that would be inconsistent with the restructuring contemplated by the LUA (emphasis added). Similarly, in section 8.2(b) of the same agreement, defendants agreed they would "not . . . approach, discuss, negotiate or agree with any other person (or solicit or accept offers from any other person) in respect of a backstop or similar arrangement in respect of the sale of the US Guarantee Claims" through December 4, 2020 (emphasis added). Thus, when the parties wished to refer to the sort of activities described by the trial court as "pursuing" a deal, they did so in unmistakable terms. If the parties had intended to have defendants' liability for the AFP triggered merely by their "pursuing" an alternative transaction, they would have so indicated by using the terms that appear in sections 4.1(b) and 8.2(b) of the LUA.

"[I]f parties to a contract omit terms — particularly, terms that are readily found in other, similar contracts — the inescapable conclusion is that the parties intended the omission. The maxim expressio unius est exclusio alterius, as used in the interpretation of contracts, supports precisely this conclusion" (Quadrant Structured Prods. Co., Ltd. v Vertin, 23 NY3d 549, 560 [2014]). Here, not only are the aforementioned terms excluded from the Backstop Agreement found in similar contracts, those terms are found in the LUA, an agreement to which both plaintiffs and defendants were parties and which was part of the same transaction as the Backstop Agreement and, therefore, must be read and interpreted together with it (see U.S. Bank N.A. v Greenpoint Mtge. Funding, Inc., 157 AD3d 93, 100 [1st Dept 2017] ["agreements executed at substantially the same time and related to the same subject matter are regarded as contemporaneous writings and must be read together as one"] [internal quotation marks omitted]; see also Nau v Vulcan Rail & Constr. Co., 286 NY 188, 197 [1941]). Thus, the parties' election not to include in the Backstop Agreement's AFP provision references to pre-contractual conduct — such as solicitation, discussion, negotiation, preparation, and the like — can mean only, in light of the inclusion of such conduct in the aforementioned sections of the LUA, that the parties did not intend to have plaintiffs' entitlement to the AFP triggered by such conduct. In holding otherwise, the majority, like the trial court, runs afoul of the admonition of the Court of Appeals that "courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing" (U.S. Bank N.A. v DLJ Mtge. Capital, Inc., 38 NY3d 169, 178 [2022] [brackets and internal quotation marks omitted]).

[*22]

The majority rests its construction of "raises, or commits to raise" primarily on the proposition that to construe "commits" to mean entering into a binding agreement would render the word "raises" surplusage.FN3 This is simply not so. While the plain and natural meaning of the phrase "commits to raise" is to undertake a binding obligation to accept alternative financing, the preceding word "raises" is naturally understood to refer to the actual receipt of funds pursuant to the new arrangement. Here, defendants did not "commit[] to raise" alternative financing until April 3, 2021, when they executed an agreement for such financing, and they did not actually "raise[]" such financing until April 30, 2021, when they began to draw on the new credit facility — in each case, after the expiration of the Backstop Agreement pursuant to its terms, on March 31, 2021. Accordingly, to construe the phrase "commits to raise" in accord with its natural meaning of undertaking an obligation in no way offends the rule of contractual interpretation that "words are never to be construed as meaningless if they can be made significant by any reasonable construction" (see 67 Wall St. Co. v Franklin Natl. Bank, 37 NY2d 245, 248 [1975]; see also Matter of Margolin, 259 AD2d 396, 397 [1st Dept 1999], lv denied 95 NY2d 764 [2000] [an interpretation that would render a word "surplusage . . . should be avoided where possible"]; Costello v O'Kane, 280 App Div 70, 73 [1st Dept 1952] ["a construction treating language as surplusage is to be avoided where reasonably possible"]).

The majority objects that reading "commits to raise" to mean entering into a binding obligation renders the word "raises" redundant because "then 'raises' would always be satisfied afterward, depriving 'raises' of independent effect." This is not correct; just because one enters into a binding financing obligation does not mean that the obligation will be fulfilled. An agreement may be reached, but the money may not be received within the relevant time frame. If what the majority means is that my reading renders "raises" redundant because the "rais[ing]" of financing will always be preceded by a binding agreement for such financing, I still disagree. While unlikely, it is possible for financing to be provided without a prior agreement. The majority dismisses this possibility as "not reflect[ing] commercial reality" and "theoretical," but the same can be said — with far more justification — of the majority's implicit position that financing could be provided without antecedent discussions and negotiations.

[*23]

As just suggested, the majority's reading of "commits to raise" has exactly the same redundancy problem that the majority claims to perceive in mine. If "commits to raise" is satisfied merely by discussing or negotiating alternative financing with another party, then actually "rais[ing]" alternative financing — meaning "the actual obtaining of alternative financing," as the majority puts it — will always be preceded by such discussions or negotiations. If the discussions themselves trigger the obligation, as the majority claims, there was no reason to include the term "raises," which will have no independent effect. Further, as previously noted, the redundancy of "raises" under the majority's reading of "commits to raise" is not even theoretically escapable — unless one believes that a lender might spontaneously leave a loan for the borrower overnight, without prior discussions.

At best, what the majority has shown is that, however one construes the phrase "commits to raise," the word "raises" is, strictly speaking, not necessary. Stated otherwise, a "rais[ing]" of financing will always be preceded by a "commit[ment] to raise," whether "commits" is construed as "entering into a binding agreement" (as I understand it) or as "substantial affirmative steps taken toward securing such financing" (as the majority understands it). Whichever way one construes the word "commits," there is a "functional distinction" (to quote the majority) between raising and committing, but the preparatory phase indicated by "commits to raise" will always precede the consummation indicated by "raises." Thus, my reading of "commits" no more "collapses the disjunctive structure" of the provision than does the majority's reading. This being the case, in construing the phrase "commits to raise," we should follow the rule that "the words used [in a contract] are to be given their natural and ordinary signification" (Hamilton v Erie R.R. Co., 219 NY 343, 353 [1916]; see also Consolidated Rest. Operations, Inc. v Westport Ins. Corp., 41 NY3d 415, 426 [2024] [contractual provisions "must be given their plain and ordinary meaning"] [internal quotation marks omitted]; Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 486 [1984], cert denied 469 US 1108 [1985] [construing a treaty in accord with "the natural and ordinary meaning of the words used"]).

[*24]

Here, as established by the dictionary and judicial definitions quoted above, the natural and ordinary meaning of "commits" is to undertake a binding obligation. Neither the majority, the trial court, nor plaintiffs have found even one dictionary definition, or even one decision construing a statute or agreement, supporting their unusual reading of the word "commits." Nothing in the Backstop Agreement, or in the context in which the word "commits" appears in the AFP provision, indicates that the parties were using that word to express anything other than its natural and ordinary meaning. "Presumptively, [the] intent [of the parties to an agreement] is expressed by the natural and ordinary meaning of their language referrable to it and such meaning cannot be perverted or destroyed by the courts through construction" (Gans v Aetna Life Ins. Co. of Hartford, Conn., 214 NY 326, 330 [1915]). The majority, having failed to rebut my demonstration that the natural and ordinary meaning of "commits" is to enter into a binding agreement, can point to nothing that justifies its disregard of the presumption that the parties' intent accords with the natural and ordinary meaning of the language they used.

The majority argues that, if the parties, by using the word "commits," had intended to require a binding agreement, "they could have said so expressly, as they did in § 2(a)" of the Backstop Agreement. This argument assumes what the majority seeks to prove. As discussed above, and contrary to the majority's assertions, nothing in the Backstop Agreement indicates that parties intended "commits" to mean something different from what they meant by the word "commitment" in section 2(a). In fact, the principle invoked by the majority works against its conclusion. As previously noted, when the parties intended to refer to discussions or negotiations, as they did in section 4.1(b) of the LUA, they referred to such conduct in unmistakable terms, not by use of some form of the word "commit."

It bears repetition that, in dismissing the dictionary and judicial definitions I have cited, and in rejecting the evidence of the parties' intent provided by the use of the word "commitment" in section 2(a) of the Backstop Agreement and section 4.1(b) of the LUA, the majority engages in circular reasoning. That is, the majority simply assumes that it has already proven that its preferred reading of "commits" is required by the context of the AFP provision— which it has not, as just demonstrated — and, based on that unsupported assumption, rejects all contrary evidence of the plain and ordinary meaning of the word "commits" and of the parties' understanding of that word. The majority's approach cannot be reconciled with the principle that the terms of a contract "must be given their plain and ordinary meaning" (Consolidated Rest. Operations, Inc., 41 NY3d at 426).

[*25]

I further observe that the majority's reading of "commits" as if it meant "pursue," and did not require a binding obligation, renders the operation of the AFP provision amorphous to the point of being unworkable. At what point does the pursuit of alternative financing become sufficiently concrete to be deemed a "commit[ment]" and thus incur liability? Is it exchanging drafts of agreements with potential lenders? Engaging in face-t0-face discussions? Merely broaching the idea in a phone call or email? Nothing in the Backstop Agreement tells us. To avoid this objection, the majority describes at length, and in detail, the state that defendants' discussions with alternative lenders had reached as of March 31, 2021. It is difficult to see how these discussions could be deemed to constitute a "commit[ment]," since it is undisputed that, as of the relevant date, defendants were negotiating with two competing lending groups. Even if the potential lenders had committed themselves to make financing available, defendants — as plaintiffs concede — had not bound themselves to accept financing from either lender. In any event, the majority, having defined "commits to raise" as taking "substantial affirmative steps" toward obtaining alternative financing, simply ignores the failure of the AFP provision to define the kind of "substantial affirmative steps," short of entering into a binding agreement, that would suffice to trigger liability for the AFP.FN4

Contrary to the majority's assertion, my reading of section 3(b) does not "incentivize strategic delay" by "allow[ing] defendants to pursue alternative financing, benefit from that pursuit, and then avoid paying the AFP simply because the final binding commitment occurred after March 31."FN5 If defendants reached an agreement in fact for alternative financing before March 31 and then deliberately delayed signing the agreement until after March 31, such conduct would arguably constitute a breach of the implied covenant of good faith and fair dealing that could not excuse defendants from liability for the AFP. In this case, however, plaintiffs do not claim that they have proven that defendants actually reached such an agreement with any particular lender before March 31 and then strategically delayed the execution of the agreement until after that date. Plaintiffs argue only that defendants were discussing alternative financing with more than one potential lender before March 31. According to plaintiffs and the majority, such discussions, by themselves, suffice to trigger liability for the AFP. I disagree.

[*26]

For the foregoing reasons, it is my view that, on this record, as a matter of law, defendants did not "raise[], or commit[] to raise" alternative financing on or before March 31, 2021, and, therefore, that plaintiffs, on that ground alone, would not be entitled to collect the AFP pursuant to section 3(b) of the Backstop Agreement. However, even if defendants had "raise[d], or commit[ted] to raise," alternative financing within the relevant time frame, plaintiffs' demand for payment of the AFP would still warrant rejection under what the majority refers to as the "Impossibility Exception" to the AFP provision. This is because the record establishes that a "condition to the occurrence of the Restructuring Effective Time . . . c[ould] no longer be satisfied," without fault on defendants' part (as the majority concedes), "as a result of which it w[as] no longer possible to implement the Scheme Transaction" (which the majority does not concede).

It is the majority's view that, notwithstanding that it became clear well in advance of March 31, 2021 that the issuance of a Bifurcation Order was a condition to the deal that could "no longer be satisfied," the failure of this condition somehow did not render it "[im]possible to implement the Scheme Transaction." I disagree. In brief, while perhaps some hypothetical alternative restructuring theoretically could have been implemented without a Bifurcation Order — had a sufficient number of creditors agreed to the necessary rewriting of all the agreements, the deferral of all milestone dates, and the re-running of the Scheme of Arrangement proceeding — the particular "Scheme Transaction" documented by the parties' actual agreements simply could not be consummated once it became clear that a Bifurcation Order would not be forthcoming by March 31, 2021. And it is the feasibility of the particular "Scheme Transaction" contemplated by the parties' agreements, as defined in those agreements — not the feasibility of some theoretical alternative restructuring to which the parties never agreed — that determines whether the "Impossibility Exception" applies.

[*27]

To reiterate, the majority does not dispute that the issuance of a Bifurcation Order was an essential condition to the restructuring transaction contemplated by the LUA, the Backstop Agreement, and other deal documents. Neither does the majority dispute that, without fault on the part of defendants HIL and HHN, it became impossible to satisfy the condition of the issuance of a Bifurcation Order by March 31, 2021. The majority assumes, however, that any hypothetical alternative deal structure dispensing with the need for a Bifurcation Order would constitute a "Scheme Transaction" within the meaning of section 3(b) of the Backstop Agreement. Based on that assumption, the majority casts the question of the feasibility of such a hypothetical, alternative deal as a question of fact as to which we should defer to the trial court's fact-finding, which was based on the court's crediting of plaintiffs' expert witnesses on English law over those of defendants (see Thoreson v Penthouse Intl., 80 NY2d 490, 495 [1992] [fact findings made at a nonjury trial, especially if based on credibility determinations, should be affirmed if supported by "any fair interpretation of the evidence"]).

The majority improperly assumes that a hypothetical alternative restructuring of defendants' finances that did not require a Bifurcation Order would qualify, as a matter of law, as a "Scheme Transaction" within the meaning of section 3(b) of the Backstop Agreement. Far from being "consistent with the text of the LUA," as the majority wrongly asserts, that assumption flies in the face of the definition of the term "Scheme Transaction." As the majority notes, the LUA (the definitions of which apply to the Backstop Agreement, as here relevant) defines "Scheme Transaction" as "a transaction pursuant to which the Restructuring or any part thereof may be implemented by way of one or more English law schemes of arrangement under Part 26 of the Companies Act 2006." The term "Restructuring" within the definition of "Scheme Transaction" is defined, in turn, as "the financial restructuring of the Group [meaning HHN and its subsidiaries] on substantially the terms set out in the Term Sheet, the Steps Plan, the US Guarantee Bifurcation Paper and the Restructuring Documents" (emphasis added). The first three documents referenced in the definition of "Restructuring" (the Term Sheet, the Steps Plan, and the US Guarantee Bifurcation Papers) are schedules to the LUA setting forth the key terms of the restructuring. The Restructuring Documents are a number of other documents (including the LUA itself) "giving effect to the Restructuring in accordance with this Agreement, the Steps Plan, the US Guarantee Bifurcation Paper and the Term Sheet."

[*28]

What emerges from the foregoing is that the parties used the term "Scheme Transaction" to mean the contemplated restructuring of defendants' finances "on substantially the terms set out" in the specific instruments that the parties had agreed upon — including, as particularly salient here, the "US Guarantee Bifurcation Paper," which is defined as "the paper setting out the bifurcation of the US Guarantee Claims set out in Schedule 11" to the LUA. While, in theory, a deal might have been possible on some hypothetical terms other than those to which the parties actually agreed, such a hypothetical deal — particularly if it did not involve a bifurcation order — would not constitute a "Scheme Transaction" within the meaning of the LUA and the Backstop Agreement. The testimony of plaintiffs' English law experts on the possibility of accomplishing a restructuring without a Bifurcation Order — which, as these witnesses admitted, would have required amending the operative documents and re-running the scheme of arrangement process in the English court — was therefore simply irrelevant (even if credited by the trial court) to the legal question of whether such a hypothetical restructuring would have constituted a "Scheme Transaction" within the meaning of section 3(b) of the Backstop Agreement. The answer to that question is plainly "no."

To reiterate, when one follows the definitional roadmap of the pertinent documents, one cannot establish a Scheme Transaction without a Bifurcation Order. It is undisputed that a Bifurcation Order proved to be unobtainable. Thus, plaintiffs cannot recover the AFP without a Bifurcation Order, since, without a Bifurcation Order, there can be no Scheme Transaction.

[*29]

Moreover, to construe section 3(b) of the Backstop Agreement, as the majority and the trial court do, to require defendants to pay the AFP if any alternative, hypothetical scheme might in theory have been implemented, essentially nullifies the provision of section 3(b) for an exception to the AFP where "it will no longer be possible to implement the Scheme Transaction." One could always posit some alternative deal on alternative terms (including different milestone dates), a deal that might have been implemented through the scheme of arrangement if the interested parties had agreed to it. If this is the test, then the AFP would always be payable, and the parties' agreed-upon provision for an exception to the AFP where the consummation of the deal became impossible would be rendered meaningless. This is contrary to the "cardinal rule of construction that a court should not adopt an interpretation which will operate to leave a provision of a contract without force and effect" (Corhill Corp. v S.D. Plants, Inc., 9 NY2d 595, 599 [1961] [internal quotation marks and ellipses omitted], quoting Muzak Corp. v Hotel Taft Corp., 1 NY2d 42, 46 [1956]; see also Two Guys from Harrison-NY v S.F.R. Realty Assoc., 63 NY2d 396, 403 [1984]; Certain Underwriters at Lloyd's v Itzhak Nissanoff Inc., 239 AD3d 478, 479 [1st Dept 2025]; 301 E. 60th St. LLC v Competitive Solutions LLC, 217 AD3d 79, 84 [1st Dept 2023]; Black Bull Contr. LLC v Indian Harbor Ins. Co., 135 AD3d 401, 406 [1st Dept 2016]).FN6

The majority argues that the definition of "Restructuring" as a financing conducted on "substantially the terms set out" in the transaction documents that the parties actually agreed upon does not require "perfect" alignment with the terms of those documents. The majority is correct that substantial conformity to the terms of the actual deal documents is a standard that can accommodate minor or peripheral deviations, and, contrary to the majority's assertion, I do not insist that "any deviation from the original restructuring materials" would be unacceptable. However, an alternative transaction that altogether dispenses with the condition precedent of a Bifurcation Order — the centerpiece of the entire transaction as the parties actually negotiated it — cannot be deemed, in my view, to meet the standard of substantial conformity.FN7 And, to reiterate, accepting the majority's view would mean the impossibility provision would never have any effect, rendering it a nullity in violation of New York's rules of contract construction (see Levine v Shell Oil Co., 28 NY2d 205, 212-213 [1971] [a construction of a contractual clause that "would result in the conclusion that the clause was a nullity . . . could not have been the intent of the parties"]).

[*30]

It also bears mention that, while plaintiffs assert that an alternative deal could have satisfied the "Scheme Transaction" requirement of section 3(d), such an alternative deal would have required plaintiffs' consent. The record shows that when defendants proposed such an alternative deal to plaintiffs, plaintiffs rejected it. Thus, plaintiffs' position here is that the court should reward them for their own intransigence. I see no reason to allow plaintiffs to have their cake and eat it, too.

For all of the foregoing reasons, I would reverse the judgment appealed from and enter judgment in favor of defendants dismissing the complaint. To the extent the majority does otherwise, I respectfully dissent.

Judgment, Supreme Court, New York County (Jennifer Schecter, J.), entered January 16, 2026, which, after a nonjury trial, awarded judgment in favor of plaintiffs and against defendants in the total amount of $15,899,653.51, and bringing up for review an order (denominated a decision), same court and justice, entered October 22, 2024, finding that plaintiffs were entitled to payment of a fee from defendants, and so much of an order, same court and Justice, entered November 12, 2024, as declined to award costs and attorneys' fees to plaintiffs, unanimously affirmed, without costs.

Opinion by Renwick P.J., All concur except Friedman, J. who dissents in part in a separate opinion.

Renwick, P.J., Friedman, Kapnick, Pitt-Burke, O'Neill Levy, JJ.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.

ENTERED: September 22, 2026

Footnotes

Footnote 1

Plaintiffs are cross-appealing from the trial court's denial of their request for costs and attorney's fees. I concur with the majority's affirmance of that aspect of the judgment.

Footnote 2

Since it is undisputed that defendants did not receive any money from the alternative financing until April 30, 2021, they could not have "used" that financing on or before March 31, 2021. I therefore assume that Supreme Court meant to write "pursuing or using" rather than "pursuing and using."

Footnote 3

Oddly, the majority attributes to me the position "that reading 'commit to raise' [sic] as something less than a binding agreement renders 'to raise' meaningful but not redundant." This is not my position at all. My position is that "commits to raise" should be given its natural reading as to enter into a binding obligation and that this reading of "commits to raise" does not render "raises" redundant. I also do not understand why the majority, in discussing the phrase "raises, or commits to raise," switches the order to "commits to raise" and "raises."

Footnote 4

In writing on March 30, 2021, that "the original Eurobond LUA is no longer relevant," defendants' financial advisor simply acknowledged that, by that time, the financing contemplated by the LUA had become impossible due to the inability to obtain a Bifurcation Order in the United States bankruptcy proceeding. As discussed below, such impossibility independently excused defendants from liability under the terms of the AFP provision.

Footnote 5

Although the majority raises this argument in its discussion of the impossibility clause, it seems to me to relate more to the construction of "commits to raise."

Footnote 6

The majority charges that my reading of the impossibility clause renders the second prong thereof ("as a result of which it will no longer be possible to implement the Scheme Transaction") ineffective. As explained above, however, the majority's reading nullifies both prongs of the clause, since, under that reading, the clause in its entirety will never become effective.

Footnote 7

It bears repeating that, since the satisfaction of the condition of a Bifurcation Order is essential, as a matter of law, to the existence of a "Scheme Transaction," as defined in the agreements, the trial court's factual finding, based on plaintiffs' expert evidence on English law, that it might theoretically have been possible to achieve a refinancing through other means, should not impact the disposition of this appeal.