Market participants involved in distressed exchange offers have become accustomed to grappling with the implications of Trust Indenture Act Section 316(b) in the context of potential exit consents, i.e., are the contemplated amendments to the indenture governing the securities subject to the exchange significant enough to impair or affect the right of a holder to receive payment of principal and interest on or after the due dates of the relevant note?
A typical bond indenture provides that prior to the incurrence of an event of default, a trustee’s obligations are limited to those specifically set forth in the indenture. It is only following the occurrence of an event of default that the trustee’s duties of prudent conduct seem to ripen. This often leaves trustees and bondholders in a state of uncertainty over what actions, if any, a trustee may be obligated to take as the financial condition of an issuer worsens but has not yet crossed the default line. A recent case from the Eastern District of Pennsylvania, Becker v.
A recent case out of the Southern District of New York, Citibank, NA, London Branch v. Norske Skogindustrier ASA(S.D.N.Y. March 8, 2016), once again illustrates the difficulty of obtaining injunctive relief against prospective indenture violations of a financially troubled issuer.
The Facts
With the current interest being focused on Section 316(b) of the Trust Indenture Act, this may be a good time to examine the differing rights of noteholders under an indenture governed by the TIA and the rights of lenders under credit agreements governed by New York law.
Prepackaged Bankruptcy Offers Investors a Quick Return to Liquidity Chapter 11 bankruptcy cases are typically lengthy and expensive, potentially lasting years and costing millions of dollars in fees and expenses. One valuable technique to minimize a debtor’s time in Chapter 11, reduce cost and disruption, and still secure the benefits of a Chapter 11 plan is a prepackaged bankruptcy (also called a “prepack”). In a prepack, a debtor negotiates the terms of a chapter 11 plan and solicits votes prior to the bankruptcy filing.
As of December 1, 2015, a new bankruptcy form for filing proofs of claim has gone into effect.
The form has undergone a number of non-substantive, cosmetic changes, which should make it easier to complete. The only substantive change is the addition of a new Item 10, which asks whether the claim is based on a lease and, if so, the amount necessary to cure defaults outstanding as of the petition date. Finally, the name of the form has been changed to Form 410.
Once a giant of the U.S. economy, the coal industry now faces uncertain times due to lower global demand, a boom in domestic natural gas production, over- levered capital structures and stringent environmental regulations. This depressed environment has attracted the attention of certain distressed investors and alternative investment funds looking to capitalize from an eventual upswing in the coal industry.
On May 4, 2015, the Delaware Court of Chancery issued an important decision regarding creditor standing to maintain a derivative action on behalf of an insolvent corporation. In Quadrant Structured Products Company v. Vertin et al., C.A. No.
The recent decision of the Supreme Court of the United Kingdom in Jetivia S.A. and Another v Bilta (UK) Limited (in liquidation) and Ors should make it easier to pursue claims against rogue directors. The Supreme Court held that, in instances where a company has suffered as a result of the unlawful behaviour of its directors, that behaviour cannot be attributed to the company to disallow the company, or its liquidators, from raising claims against directors for breach of their duties.
Background
On 29 April 2015 The Insolvency Service of the UK Government published updated insolvency statistics which include a breakdown of insolvencies that occurred in 2014 across various industry sectors including the construction industry. There are separate tables of statistics for England and Wales and for Scotland.