Implied Covenant Claims Get Boost
June 1, 2026 – Turnarounds & WorkoutsElizabeth Plowman, partner in Herrick's Restructuring & Finance Litigation Department and associate Timothy M. Whitteaker, wrote an article for Turnarounds & Workouts discussing a recent case that highlights the continued importance of the implied covenant of good faith and fair dealing under New York law, particularly in complex financing transactions such as liability management exercise (LMEs).
This litigation involved STG Logistics, Inc. (Axos Fin., Inc. v. Reception Purchaser, LLC, 88 Misc. 3d 1203(A) (Sup. Ct. N.Y. Cnty. 2026)), where New York’s Commercial Division upheld a claim (against a motion to dismiss) for alleged breach of the implied covenant of good faith and fair dealing during a liability management exercise.
The article noted that "following this decision, certain borrower-defendants (STG) filed for Chapter 11 in the U.S. Bankruptcy Court for the District of New Jersey (In re STG Logistics, Inc., No. 26-10258-MEH (Bankr. D.N.J. 2026)). Given the Chapter 11 filing, the LME litigation was moved to an adversary proceeding before the bankruptcy court."
A PDF of the article can be found here. The latest issue of Turnarounds & Workouts is available at https://www.turnaroundsworkouts.com/.