Settlement of collection disputes over amounts and payment terms for bond-related claims, including in bankruptcy cases, involves issues of binding minority bondholders and releasing the indenture trustee, as well as straightforward determinations of collectability economics.   Bondholders unhappy with a proposed settlement can be bound nevertheless when the deal is incorporated into a bankruptcy plan of reorganization and majority bondholders out-vote them, but only if certain requirements are met.  A recent bankruptcy court decision, In re Lower Bucks Hosp., 471 B.R.

Parent company guarantees and performance bonds are typically used in the construction and engineering industries to provide a developer with some security in the event that the contractor breaches the building or engineering contract or, in some circumstances, upon the contractor's insolvency.

In the current economic climate, contractor default is, unfortunately, even more prevalent in the construction and engineering industries, and so the issues surrounding parent company guarantees and performance bonds are very much in focus for developers.