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Hedge Funds Invoke Antitrust Law in Landmark Selecta Debt Battle

By  |  October 29, 2025

A group of hedge funds has launched a groundbreaking lawsuit in New York, claiming that a recent debt restructuring deal violated U.S. antitrust laws, according to the Financial Times. The case marks a rare use of competition law in the world of distressed debt — a field increasingly dominated by aggressive financial maneuvers and high-stakes creditor battles.

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    The funds, including Manulife’s CQS, Algebris Funds, and Deltroit Asset Management, allege they were unfairly excluded from a restructuring agreement for Swiss vending machine operator Selecta. The suit accuses a rival coalition of bondholders — among them Invesco, Man Group, Strategic Value Partners, and Diameter — of forming a so-called cooperation agreement that granted them preferential economic terms.

    Per the Financial Times, the claimants argue that this coordination among competitors effectively created a cartel in violation of both the federal Sherman Act and New York’s Donnelly Act. The lawsuit asserts that the majority bondholder group manipulated the restructuring process to secure higher-value securities while leaving the minority holders with assets worth substantially less.

    The complaint describes the cooperation agreement as an “anti-competitive and collusive” arrangement designed to control the pricing of Selecta’s first-lien debt. According to the Financial Times, the bonds held by the majority group are now trading at more than 70 cents on the dollar, while those belonging to the minority group are worth roughly half that amount.

    The dispute centers on Selecta’s complex refinancing efforts earlier this year, as the company sought to address nearly €1.5 billion in debt it could not repay. The majority bondholders, using provisions under Dutch law for distressed sales, gained control of the company and offered smaller creditors a coercive exchange. Those excluded from the inner circle were forced to choose between retaining downgraded existing bonds or swapping into new, senior debt that granted the controlling group enhanced powers to modify key protections.

    According to the Financial Times, this is the first known instance where hedge funds have invoked antitrust principles in distressed debt litigation. Analysts suggest the case could have wide-ranging implications for how restructuring negotiations are conducted, particularly as non-pro rata debt exchanges become more common on both sides of the Atlantic.

    Source: the Financial Times