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Better Health has settled with two holdout lenders by cutting them into January’s liability management exchange on terms close to the steerco but with a partial cash paydown and without the requirement of putting up new money, according to sources.

The two remaining lenders, represented by Selendy Gay, had threatened litigation starting in March, as 9fin reported, aiming to challenge the transaction’s treatment of non-participants. Selendy had even drafted the complaint and was about to sue in New York State court, according to sources.

After sending a copy of the complaint to the company before filing it, the company ultimately engaged offering a deal detailed below. Sources suggest that the merits of the argument may have less to do with the settlement than the relative cost of assuaging a smaller holdout group, and ultimately the settlement represents a victory for holdouts at little cost to the company.