2009 D e c i sion s O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit
11-2-2009 

# I n Re K ai se r Alum C or p P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ock e t N o . 08-1406

F o l lo w thi s a nd a dd it ion al w ork s a t : h tt p://d i g it alc ommon s .l a w . v i l l a no v a . e du/thir dc ir c uit_2009

Thi s de c i sion i s br ou gh t t o y ou for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit a t V i l l a no v a U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. I t h as be e n a c c e pt e d for inclusion in 2009 D e c i sion s b y a n a uthor i z e d a dmini s tr a t or of V i l l a no v a U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. F or mor e infor m a t ion, p le as e c on t a ct Be n j a min . C a rl s on@l a

w . v i l l a no v a . e du
. R e c omme nde d C it a t ion

" I n R e K ai s e r Alum C or p " (2009). 2009 D e cisio n s . P ape r 324. h tt p://d i g it alc ommon s .l a

w . v i l l a no v a . e du/thir dc ir c uit_2009/3241 

### NOT PRECEDENTI AL
UNITED STAT ES COURT OF APPEALS FO R T HE TH IRD CIRC UI T
N o. 08- 1406
In re: KAISER ALUMINUM CORP ORATION, et al ., De btors
LAW DEBENTURE T RUST COMP ANY OF NEW YORK, Appe llant
On Appeal from

the United State s District Court for the District of D elaw are D istri ct Co urt N o. 06- cv -0 0160 Sen io r Dis tri ctJu dg e: The Ho no rab le Jo se ph J. Far na n, J r.

A rg ue d S ep te m

be r 15, 200 9 Befo re: SLOVITER, FUENTE S, an d S MITH, Circuit Judges

(F ile d: N ove m

be r 2, 200 9)2



### D an ie l J. D eF ranc es ch i Ja son M. Ma dr on Richards, Layton & Finger One R odney

Square 920 North King Street W ilm ing ton , D E 198 99 G re gor y M. G or don D an ie l P
. W ini kka Jones Day 2727 North H arw ood Street D al la s, T X 752 01 D av id F
. H er

r (A rg ue d) Ma slo n, E de lm an , Bo rm an& Br an d 90 South Seventh Stree t 3300 W ells Fargo Center Mi nne ap oli s, MN554 02 Co unse l f or K ais er A lum inu m Co rporati on Ro y T
. E ngl er

t, Jr
. ( A rg ue d) Robbin s, Russell, Englert, Or seck & U ntereiner 1 8 0 1 K S t re et , N. W. Su ite 411 W as hin gto n, D C 2 0006 Co unse l f or L awD eb en tur e Tr ust

Co m panyof Ne w Yo rk D av id J
. Ba ldw in 1313 North Market Stre et 6thF loo r, P
. O
. Bo x 95 1 W ilm ing ton , D E 198 01 Is aa c M. P ac hul ski Ke nneth J. Shaff

er St utm an , T re ist er

& G la tt 1901 Avenue of the S tars3



### 12th F loo r L os A nge le s, CA900 67 Co unse l f or L iv er pool L TD P art

ne rsh ip D av id F
. H er

r (A rg ue d) K es haL
. T an ab e Ma slo n, E de lm an , Bo rm an& Br an d 90 South Seventh Stree t 3300 W ells Fargo Center Mi nne ap oli s, MN554 02 Co unse l f or U
. S. B ank Na tio nal A sso ci ati on W illiam P. Bowden Ashby & G eddes 500 D el aw ar e A ve nue P. O
. Bo x 11 50, 8thF loo r W ilm ing ton , D E 198 99 Co unse l f or J P M orga n T rus t C o. and O ffi ci al C om m itt ee of U

nse cu re d C

re dit ors D av id N
. Cr ap o Br ian M cM ah on Gibbons, P. C. One G atew ay

Center N ew ar k, N J 07 102 D av id F
. H er

r (A rg ue d) Ma slo n, E de lm an , Bo rm an& Br an d 90 South Seventh Stree t 3300 W ells Fargo Center Mi nne ap oli s, MN554 02 Co unse l f or Cita de l E

qui tyF und D av id N
. Cr ap o Br ian M cM ah on Gibbons, P. C.4



### One G atew ay

Center N ew ar k, N J 07 102 Co unse l f or B ea r St ea rns & Co

. K ar enC. Bi ff

er at o Marc J. P hil lip s Co nnol ly , Bo ve , L odge & H utz 1007 North O range Stre et P. O
. Bo x 22 07 W ilm ing ton , D E 198 99 G eo rg e A
. D av is Gr egory A. Markel Cadwa lader, W ickersham & T aft One W orld Financial Center N ewY ork, N Y 100 38 A da m C. D em br ow G re enbe rg T ra

ur ig 200 Park A ve nue Me tL if e Bu ild ing N ewY ork, N Y 101 66 D av id F
. H er

r (A rg ue d) Ma slo n, E de lm an , Bo rm an& Br an d 90 South Seventh Stree t 3300 W ells Fargo Center Mi nne ap oli s, MN554 02 Co unse l f or A d H oc G roup of Se nio r N

ote holde rs D av id F
. H er

r (A rg ue d) Ma slo n, E de lm an , Bo rm an& Br an d 90 South Seventh Stree t 3300 W ells Fargo Center Mi nne ap oli s, MN554 025



### Carl N . K unz, II I Mor ri s Jam es 500 D el aw ar e A ve nue P. O
. Bo x 23 06, S uit e 1500 W ilm ing ton , D E 198 99 Co unse l f or D eu tsc he B ank

T rus t Sharon M. Zie g Y oung , Co naw ay , S targ att & T ay lor 1000 W es t S tr ee t, P
. O
. Bo x 39 1 17th F loo r, Br an dy

w ine Bu ild ing W ilm ing ton , D E 198 99 Co unse l f or C en t I nde m nit y Co

. A lls tat e In s. Co

. Ca nm art Co

. P en sio n B en ef

it G uara ntyCo rp. Asbestos Futures Re

presentat ive Marc S
. Ca sari no Wh i t e & Wi l l i a ms 824 North Market Stre et P. O
. Bo x 70 9, S uit e 902 W ilm ing ton , D E 198 01 Co unse l f or Sili ca F

utu re Claim ant

s AC E I nc. C o., LTD Mark T . H urford Cam pbe ll & L ev ine 800 North King Street Su ite 300 W ilm ing ton , D E 198 01 Co un se l f or Pers on al Inj ur y Co mm. Asb es to s C

re di to rs Co mm. David M. K lauder United States D epartm ent of JusticeThi s Court ha s jur i s di c t i on unde r

28 U. S. C. § 158( d) and 28 U. S. C. § 1291. 1 6 

### Of fice of the Tr

ustee 844 King Street Su ite 220 7, L oc kbox 35 W ilm ing ton , D E 198 01 Counsel fo r David M

. K lauder, T rustee
OPINION

SMI TH, Circuit Judge. In this Ch apte r 11 reorganizati on ca se abou t a 19 93 indenture ( the “ Indenture”) , Law De be nt

ur e Tr us t Com pany of Ne w York ( “ LDTC” ) , the i nde nt ur e tr us t e e unde r

the I nde nt ur e , c ha l l e nge s the s ubor di na t i on of aguar ant e e m a de i n the I nde nt ur e ( the “ 1993 Gu ar ante e” ) t o lat er

gu ar ante es (the “199 4 and 19 96 Gu ar ante es ”) that it beli eves were i m pr op e r l y de s i gn a t e d a s “ Se ni or

I nd e bt e dn e s s ” un de r

the I nd e nt

ur e . Op po s i ng LD TC
ar e the i nde nt

ur e tr us t e e s and not e hol de r s for the not e s tha t

we r e the s ubje c t

of the 1994 and 1 99 6 G uarantee s ( coll ec ti vely , the “199 4 and 19 96 No te ho lder s” ). L D T C raises tw o issu es o n ap p eal. F irst, it claim s th at th e D istrict C o u rt erredin 1 af f irm in g th e B an k rup tcy

C o u rt’s co n clu sio n th at th e 1 9 9 4 an d1 9 9 6 G u aran tees co u ld be de s i gna t e d a s Se ni or

I nde bt e dne s s unde r

the I nde nt

ur e . Se c ond, i t

ar gue s tha t

the D istrict C o u rt erredb y

p erm ittin g th e B an k rup tcy C o u rt’s co n sid eratio n o f ex trin sic7

e vi de nc e whe n c ons tr

ui ng the I nde nt

ur e . Our c onc l us i on on the fi r s t

i s s ue di s pos e s of this appeal and o bv iate s the need fo r dis cuss ion o f extri nsic evidence. W e wi l l a ffi rm

the Di s tr i c t

Court ’ s c onc l us i on tha t

the I nde nt

ur e pe rm i t t e d the de s i gna t i ons of the 1994 and 1996 Gua r ant e e s a s Se ni or I nde bt e dne s s . As s uc h, the 1 9 9 3 G u aran tee is sub o rd in atedto th e 1 9 9 4 an d1 9 9 6 G u aran tees. I. I n 1993, Ka i s e r

Al um i num

& Che m i c a l Cor

por a t i on ( “ KACC” ) i s s ue d $400
m illio n in n o tes (th e “1 9 9 3 N o tes”) u n d er th e In d en tu re. T h ese n o tes w ere g u aran teed , in the 199 3 G uarantee , by

KA CC ’s subsidiari es : Kai se r Alum inum Au stra li a, Alpart Jam ai ca , and Kais er

Jam ai ca (the “Sub si diar

y Gu ar antors ”)
. In 1 9 9 4 an d1 9 9 6 , KA C C issu edad d itio n al n o tes (th e “1 9 9 4 an d1 9 9 6 N o tes”) in the a m ount s of $225 m i l l i on and $175 m i l l i on, r e s pe c t i ve l y . Li ke the 1993 Not e s , the 1994 and 1996 Not e s we r e guar ant e e d, i n the 1994 and 1996 Guar ant e e s , by the S ub sid iary

G u aran to rs. I n 2002, KACC and e a c h of the Subs i di ary Guar ant or s fi l e d Cha

pt e r 11
r e or gani z a t i on pe t i t i ons . LDTC m ove d the Bankr upt c y Court t o de t e rm i ne the r e l a t i ve priori ty of the 199 3 G uarantee vis- á- vis t he 19 94 and 1 99 6 G uarantee s, and the part ie s
a gr e e d t o c onve rt

the m ot i on i nt o an obje c t i on t o the pr opos e d Cha pt e r 11 r e or gani z a t i on p lan o f f eredb y KA C C an dth e S ub sid iary G u aran to rs.8

Both part i e s a gr e e tha t

the I nde nt

ur e c ontr ol s the r e l a t i ve pr i or i ty of the 1993, 1994, and 1996 Gua r ant e e s . LDTC a s s e rt s tha t the 1994 and 1996 Guar ant e e s c annot be de s i gna t e d a s Se ni or

I nde bt e dne s s unde r

the I nde nt

ur e and, the r e for e , the 1993 Gua r ant e e i s not

s ubor di na t e d t o the 1994 and 1996 Guar ant e e s . The 1994 and 1996 No te ho lder s, on the other hand , c la im

that the 199 4 and 19 96 Gu ar ante es qu al ify as Se ni or I nde bt e dne s s unde r

the I nde nt

ur e and the r e for e ha ve pr i or i ty ove r the 1993 Gu ar ante e. Th e Bankrup tc y

Co urt, in concluding that the 199 4 and 19 96 Gu ar ante es were p ro p erly d esig n atedas S en io r In d eb ted n ess u n d er th e In d en tu re, n o tedth at “it [ w as] abun dantly

cl ear that the [

par ipas s u treatm en t o f

th e 1 9 9 3 , 1 9 9 4 , an d1 9 9 6 G u aran tees] sugg es te d b y

LD TC was not cr eate d b y the I nd enture .” Accordingly , the Bank ruptcy C o u rt o v erru ledL D T C ’s o b j ectio n to th e p ro p o sedC h ap ter 1 1 reo rg an izatio n p lan
. L D T C ap p ealedto th e D istrict C o u rt, w h ich af f irm edth e B an k rup tcy

C o u rt’s o rd er. L D T C n o w ap p eals to th is C o u rt. II
. LDTC’ s fi r s t

ar gum e nt , tha t

the 1994 and 1996 Guar ant e e s c oul d not be de s i gna t e d a s Se ni or

I nde bt e dne s s unde r

the I nde nt

ur e , i s ba s e d on i t s r e

je c t i on of the Bankr upt c y Court ’ s c ons tr

uc t i on of the I nde nt

ur e . W e r e vi e w tha t

c ons tr uc t i on de no vo . ST V E ng ’r

s, Inc. v. Grei ner Eng ’g, I nc. , 8 6 1 F .2 d7 8 4 , 7 8 7 (3 dC ir. 1 9 8 8 ).9

A s d escrib edb elo w , w e co n clu d e th at w h en a S ub sid iary G u aran to r attem

p ts
r e or gani z a t i on, Art i c l e 16 of the I nde nt ur e s ubor di na t e s guar ant e e s tha t ar e not Se ni or I nde bt e dne s s t o a l l Se ni or I nde bt e dne s s of tha t

Subs i di ary

Guar ant or . W e a l s o c onc l ude that the definit ion o f S enior I nd ebte dn es s, contai ned in A rt ic le 1 o f the Indenture, pe rm i t t e d KACC t o de s i gna t e the 1994 and 1996 Guar ant e e s a s Se ni or I nde bt e dne s s and th at it p ro p erly

d idso . A. Arti cle 16 o

f t he Indenture Sub ordina tes all of a Sub si diary Gua rantor’s G u a ra n tees th a t a re n o t S en io r In d eb ted n ess to a ll S

en io r In d eb ted n ess. Sect ion 1 6.02 of

the I nd enture subo rdinat es ea ch Su bsidiary Gu ar antor’ s ob li gati on s und er

the 199 3 G uarantee to the Senior I nd ebte dn es s of that Sub si diar y G u ar an t o r . I t

s t a t e s th a t

“ a l l p aym e n t s p u r s u an t

t o th e [ 1 9 9 3 ] G u ar an t e e b y [ an y] Subs i di ary

Gua r ant or

ar e he r e by

e xpr e s s l y

s ubor di na t e d .
. . i n r i ght of pa y m e nt t o the p rio r p ay m en t in f u ll . . . o f all S en io r In d eb tedn ess o f [ th at] S ub sid iary

G u aran to r.” In th e ev en t o f

a S ub sid iary

G u aran to r’s reo rg an izatio n , S ectio n 1 6 .0 3 p ro v id es “th e h o ld ers o f

all S en io r In d eb ted n ess o f [ th e] S ub sid iary

G u aran to r [ th e rig h t] to
r e c e i ve pay

m e nt i n ful l
. . . be for e the hol de r s of the [1993] Not e s or the Tr us t e e on behalf of the noteholders shal l be e ntit le d to rec ei ve, pursuant t o the [1 99 3] Gu ar ante e, any dire ct or indire ct

pay m ent or dis tr ibution o n o r with res pect to the [19 93 ] N otes .” In
o th er w o rd s, if

a S ub sid iary

G u aran to r is reo rg an izin g , it m u st p ay th e h o ld ers o f

its Se ni or I nde bt e dne s s i n ful l pr i or t o any pay m e nt i t i s obl i ga t e d t o m a ke unde r the 199310

Gu ar ante e. Be c aus e the Subs i di ary

Gua r ant or s ar e r e or gani z i ng, Se c t i on 16. 03 a ppl i e s and the ho lder s of their

Senior Indebtedness ar e e ntit le d to p ay m ent pri or to any

pay m ent und er the 199 3 G uarantee . B. Th e Def

init ion o f Senior I ndebte dn es s Per

mitted the 199 4 a nd

19 96 Gu aran te es to b e D esign a ted

a s S en io r In d eb ted n ess. To de s i gna t e ac e rt a i n i nde bt e dne s s a s Se ni or I nde bt e dne s s , KACC m

us t pr ovi de not i c e of the de s i gna t i on i n wr i t i ng and the ty pe of i nde bt e dne s s m

us t fa l l unde r

one of th e categ o ries d escrib edin th e d ef in itio n o f S en io r In d eb ted n ess, w h ich is lo catedin Sect ion 1 .01 o f the Indenture. I t i s undi s put e d tha t

KACC pr ovi de d pr ope r

not i c e for

the 1994 and 1996 G u aran tees. A cco rd in g ly , th e cru x o f th is ap p eal rests o n w h eth er th e In d en tu re p erm its the 1994 and 1996 Guar ant e e s , guar ant e e s m a de by the Subs i di ary

Guar ant or s for KACC’ s 1994 and 1996 Not e s , t o be de s i gna t e d a s Se ni or I nde bt e dne s s . The 1994 and 1996 Not e hol de r s ar gue tha t c l aus e s ( i i ) ( A) ( 1) and ( i i ) ( D) of the de fi ni t i on of Se ni or Indebtedness perm itte d d es ignati on of those guarantee s a s Senior I nd ebte dn es s. We agre e. Cl aus e ( i i ) ( A) ( 1) , a s a ppl i e d t o e a c h Subs i di ary Guar ant or , s t a t e s tha t

“ the princi pal of, prem ium , i f any , and inte re st on al l i nd ebte dn es s of [ the Sub si diar y G u aran to r] f

o r m o n ey b o rro w ed(in clu d in g all su ch in d eb ted n ess ev id en cedb y n o tes,KA C C can n o t d esig n ate th e 1 9 9 4 an d1 9 9 6 G u aran tees as S en io r In d eb ted n ess 2 u n d er clau se (ii)(A )(5 ) b ecau se it is th e p aren t co m p an y o f th e S ub sid iary

G u aran to rs. 11 de be nt ur e s or othe r s e c ur i t i e s i s s ue d for

m one y , whe the r

i s s ue d or a s s um e d by

[the S ub sid iary

G u aran to r] )” m ay

b e d esig n atedas S en io r In d eb ted n ess b y KA C C . A gu ar ante e i nv olves an “agree [m ent] to answer for a debt or default .” B L ACK ’ S L AW D I C T I ON AR Y 773 ( 9th e d. 2009)
. Suc h a gr e e m e nt s ar e “ [a ] pr om i s e t o ans we r for the p ay m en t o f so m e d eb t . . . in case o f

th e f ailu re o f an o th er w h o is liab le in th e f irst inst ance .” I

d. (d ef in in g “g u aran ty ”). T h e S ub sid iary G u aran to rs assu m edin d eb ted n ess, the pr om i s e t o ans we r

for KACC’ s de bt s i n c a s e of i t s fa i l ur e t o r e pay m one y borr owe d, b y g u aran teein g th e 1 9 9 4 an d1 9 9 6 N o tes. L D T C arg u es th at su ch an u n d erstan d in g o f th e In d en tu re w o u ldren d er clau se (i i) (A)( 5) of

the definit ion o f S enior I nd ebte dn es s s up er fluo us. That c la use s tate s that “all g u aran tees b y

[ th e S ub sid iary

G u aran to r] o f

an y in d eb ted n ess ref

erredto in
. . . cl ause (i i) (A) of any

Su bsidiary

of [the Su bsidiary

Gu ar antor]” m ay

be desi gn at ed as Senior Indebtedness if prop er no ti ce is is sued by

KA CC . LDT C p roperl y no te s that
c l aus e ( i i ) ( A) ( 5) on l y

c ov e r s aSubs i di ary

Gu ar ant or ’ s gu ar ant e e s of i t s ow n
sub sid iaries. If

clau se (ii)(A )(1 ) co v ers all g u aran tees, th en , acco rd in g to L D T C , clau se 2 (ii)(A )(5 ) w o u ldserv e n o p u rp o se b ecau se it co v ers a su b set o f all g u aran tees. T o av o id
r e nde r i ng c l aus e ( i i ) ( A) ( 5) s upe r fl uous , LDTC a s s e rt s , c l aus e ( i i ) ( A) ( 1) m us t be
co n stru edto ex clu d e g u aran tees.Cl aus e s ( i i ) ( A) ( 1) , ( i i ) ( A) ( 5) , and ( i i ) ( A) ( 7) ar e i l l us tr a t i ve . Cl aus e ( i i ) ( A) ( 7) 3 c ove r s “ a l l obl i ga t i ons of [aSubs i di ary Guar ant or ] i n c onne c t i on wi th the i s s uanc e of indu stri al re venu e bon ds.” Assum ing, hy po thet ic al ly , that a

subsidiary

of a Sub si diar

y Gua r ant or

i s s ue d i ndus tr i a l r e ve nue bonds , tha t pr ope r wr i t t e n not i c e wa s pr ovi de d, and that the Sub si diar

y Gu ar antor guarante ed those i nd ustr ia l r evenue bo nd s, cl ause s (i i) (A)( 1), ( ii )( A)(5), and (ii )( A)(7) wou ld al l per m it the guarantee to be desi gn at ed as Senior Indebtedness . Cla use ( ii )( A)(1) wou ld apply beca use the indebtedness incurr ed wa s fo r m on e y bo rr ow e d, ( i i ) ( A) ( 5) wo ul d a pp l y be c aus e i t

wa s agu ar ant e e of

a subsidiary

by a Sub si diar

y Gu ar antor, and (ii )( A)(7) wou ld apply beca use i t was an “ obl i ga t i on” i nc urr e d by

the Subs i di ary

Guar ant or

i n c onne c t i on wi th the i s s uanc e of in du strial rev en u e b o n d s. C lau se (ii)(D ) also sh o w s th e In d en tu re’s to leran ce o f sup erf lu o u s d raf

tin g
— it c ont a i ns ove r l a

p e ve n wi thi n i t s e l f. I t

us e s the phr a s e “ I nde bt e dne s s , obl i ga t i on or gu ar ante e” y et

the definit ion o f “Indebtedness” in Sect ion 1 .01 o f the 19 93 Indenture in clu d es at least so m e o b lig atio n s an dall g u aran tees. 12 We d isag ree w ith L D T C ’s arg u m en t. C lau se (ii)(A )(1 ) is n arro w er th an clau se (i i) (A)( 5), bec ause the form er is li m it ed to indebtedness fo r m on ey bo rr ow ed, wherea s th e latter in clu d es all g u aran tees, f o r an y p u rp o se, m ad e b y

a S ub sid iary

G u aran to r f

o r its
ow n sub si diar ie s. Fo r e xam ple, cl ause (i i) (A)( 5) wo uld include a Sub si diar y Gu ar antor’ s g u ar an t e e o f

as ub s i d i ary ’ s l e a s e o b l i g a t i o n s , w h i l e c l au s e ( i i ) ( A ) ( 1 ) w o u l dn o t . S o me
ove r l a p i n the two c l aus e s i s not fa t a l , e s pe c i a l l y

i n l i ght of the othe r

ove r l a ppi ng p ro v isio n s in th e d ef

in itio n o f S en io r In d eb ted n ess. 3 LD TC al so ar gu es that

we m ust pre sum e that the Indenture i ntended to exclude a S ub sid iary

G u aran to r’s g u aran tee o f a p aren t co m

p an y b ecau se clau se (ii)(A )(5 ) o n ly
c ove r s aSubs i di ary

Gua r ant or ’ s guar ant e e of as ubs i di ary . LDTC’ s ar gum e nt r uns
c ontr ary t o the s tr uc t ur e of the I nde nt

ur e . Cl aus e s ( a ) thr ough ( e ) of the de fi ni t i on ofSect ion 1 5.04 of the I nd enture st at es that

the I nd enture is go verned by New 4 Yo rk l aw. 13 Senior Indebtedness excl ud e s peci fic c at egorie s of ind ebte dn es s from being d es ignate d
as Senior Indebtedness . Guarantee s of a parent c om pany ar e not cate go ri ca ll y

excl ud ed i n thos e c l aus e s . The m e r e pr e s e nc e of the e xc l us i on c l aus e s ne ga t e s LDTC’ s ar gum e nt that the I nd enture was i ntended to im plic it ly excl ud e guarant ee s of a parent c om pany . I f the I nd enture was i ntended to exclude such gu ar ante es , the excl usion cou ld have been listedw ith th e o th er ex clu sio n clau ses. In sh o rt, w e w ill n o t p resu m e an im p licit
ex clu sio n o f

g u aran tees o f

a p aren t co m

p an y w h ere th e In d en tu re h as ex clu sio n clau ses. Finall y , LDT C argues that c la use ( ii )( A)(1) covers on ly m on ey bo rr ow ed by

ea ch Subs i di ary

Gua r ant or . LDTC woul d ha ve us i nc l ude a ddi t i ona l t e rm s i n c l aus e ( i i ) ( A) ( 1)
s o tha t i t r e a ds a s fol l ows : “ a l l i nde bt e dne s s of s uc h Pe r s on for m one y borr owe d [ by such Pe r s on ] .” T h is C o u rt, h o w ev er, is p ro h ib itedf ro m ad d in g term s to th e In d en tu re. W.W.W. A sso cs. v. G ia n co n tieri , 566 N.E.2d 63 9, 64 2 (N.Y. 19 90 ) ( “[W]hen p arti es se t down the i r

a gr e e m e nt

i n ac l e ar , c om

pl e t e doc um e nt , the i r

wr i t i ng s houl d a s ar

ul e be
e nfor c e d a c c or di ng t o i t s t e rm s . ” )
. “ I nde bt e dne s s for m one y borr owe d, ” i nc l udi ng 4 “notes
. . . whether

is sued or assumed , ” m ay be de s i gna t e d a s Se ni or

I nde bt e dne s s . The Subs i di ary

Gua r ant or s ’ a s s um

pt i ons of i nde bt e dne s s for m one y borr owe d by

KACC throug h the 19 94 and 1 99 6 G uarantee s, ther efore, i s c ov er ed un der c la use ( ii )( A)(1). Th e des ignati on s of the 19 94 and 1 99 6 G uarantee s a s Senior I nd ebte dn es s wer e14

al so prop er

un der c la use ( ii )( D). That c la

use, as applie d to eac h S ub si diar y Gu ar antor, states th at “all p en alties, f ees, p rem iu m s, ex p en ses, reim b u rsem en ts, in d emn ity obl i gat i ons and a l l othe r

m one t ary

obl i ga t i ons of [the Subs i di ary Guar ant or ] i n r e s pe c t

of
any I nde bt e dne s s , obl i ga t i on, or guar ant e e de s c r i be d [a ny whe r e i n c l aus e ( i i ) of the d ef in itio n o f S en io r In d eb ted n ess] ” m ay b e d esig n atedas S en io r In d eb ted n ess b y KA C C
. LDTC c onc e de s tha t

the 1994 and 1996 Not e s ar e Se ni or I nde bt e dne s s unde r

the I nde nt ur e . The 1994 and 1996 Gua r ant e e s we r e m one t ary obl i ga t i ons unde rt a ke n by the S ub sid iary

G u aran to rs in resp ect o f

th e 1 9 9 4 an d1 9 9 6 N o tes issu edb y KA C C
. The r e for e , the 1994 and 1996 Gua r ant e e s m ay pr ope r l y be de s i gna t e d a s Se ni or Indebtedness un der c la

use ( ii )( D). LDTC ar gue s tha t

the m one t ary

obl i ga t i ons i nc urr e d by

e a c h Subs i di ary

Guar ant or
m u st b e in resp ect o f

its o w n “In d eb ted n ess, o b lig atio n , o r g u aran tee” th at co u ld
o th erw ise b e p ro p erly

d esig n atedas S en io r In d eb ted n ess. L D T C ’s co n stru ctio n o f clau se (ii)(D ) can n o t b e reco n ciledw ith th e tex t. S ee W.W.W. A sso cs. , 5 6 6 N .E .2 dat 6 4 2
. C lau se (ii)(D ) states th at each S ub sid iary G u aran to r’s m o n etary

o b lig atio n m ay

arise f r o m “ anyI nde bt e dne s s , obl i ga t i on or guar ant e e , ” tha t

woul d othe rwi s e qua l i fy a s Se ni or I nde bt e dne s s unde r

c l aus e ( i i )
. Thi s i nc l ude s KACC’ s 1994 and 1996 Not e s and any othe r “ I nd e bt e dn e s s , ob l i gat i on , or gu ar ant e e ” of

any e nt i ty that wo ul d o the rwi s e qu a l i fy
as Senior Indebtedness un der c la use ( ii ) of the Indenture, not just the Su bsidiary15

G u aran to r’s “In d eb ted n ess, o b lig atio n s an dg u aran tees.” II I. LD TC al so ar gu es that

the Bankrup tc y

Co urt’ s e valuat ion o f extri nsic evidence
wa s i m pr ope r unde r Ne w York l aw. Be c aus e the I nde nt ur e i s una m

bi guous , we r e s ol ve th is ap p eal o n th e co n stru ctio n o f th e In d en tu re alo n e an dn eedn o t d iscu ss ex trin sic evidence. I V. The I nde nt

ur e ’ s de fi ni t i on of Se ni or I nde bt e dne s s pe rm i t t e d de s i gna t i on of the 1 9 9 4 an d1 9 9 6 G u aran tees as S en io r In d eb ted n ess. B ecau se th e In d en tu re’s lan g u ag e is
u n am b ig u o u s, th is C o u rt n eedn o t ad d ress w h eth er th e ex trin sic ev id en ce w as p ro p erly ad m itted . A cco rd in g ly , w e w ill af f irm th e D istrict C o u rt’s j u d g m en t.