The pending bankruptcy case involving LTV Corporation initially involved a challenge to the underlying concepts of securitization. In the early phases of the case, LTV Corporation attacked two of its own securitizations; one backed by its trade receivables and one backed by its inventory.
As the cases progressed, LTV withdrew its attack on securitization when the securitization investors (lenders) agreed to supply replacement financing through a DIP (debtor-in-possession) facility. In effect, LTV and its securitization investors reached an out-of-court settlement on the potentially troubling issues. This result has the combined effect of (1) relieving the securitization community of the small but immediate risk of an adverse finding by the Bankruptcy Court and (2) denying the securitization community of the opportunity to have received a favorable ruling.