Highlights

Counterparties should continue to follow their current contractual obligations

Silicon Valley Bank’s parent company bankruptcy filing will not impact contractual rights

Counterparties should be vigilant and consider alternate financing arrangements

In the aftermath of recent municipal bankruptcies in which issuers proposed and/or implemented bankruptcy plans involving partial discharges of the issuer’s payment obligation on insured bonds, there has been increased focus on whether municipal bond interest paid by a bond insurer after the bankruptcy plan’s effective date continues to be tax-exempt.