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They can set up the sale of the mortgage to a noteholder that allows this and understands it’s likely to happen.

With the noteholder agreement, the company has "an exit path from Chapter 11 as a deleveraged business, poised for continued growth," Fox said in the filing.

This provides a strong incentive for noteholders to tender into the exchange, since “holding out” in the old notes means being left with notes that provide very little protection for the noteholder.

Instead, Covenant Review notes that the exchange offer proposes to briefly swap term loan lenders into the old notes — where they will then consent to the noteholder’s exchange offer — before finally receiving their promised recovery under the term loan exchange offer.

So the term loan lenders will be also noteholders for a nanosecond, and during that time they will help tip the noteholder vote in favor of the exchange offer and stripping out the covenants.