Insights & Publications
Diversity & Inclusion
© 2023 Debevoise & Plimpton LLP
Second Circuit Court of Appeals Lifts Cloud of Uncertainty over Bond Restructurings
18 January 2017
View Client Update
The Second Circuit Court of Appeals reversed a lower court decision that interpreted minority bondholder protections in Section 316(b) of the Trust Indenture Act (“TIA”) to restrict out-of-court bond restructurings.
The court held that Section 316(b) of the TIA only prevents changes to an indenture’s core payment terms and does not prevent other transactions that may impair a bondholder’s practical ability to receive payment.
This ruling removes uncertainty over whether certain out-of-court bond restructurings are permissible under Section 316(b) of the TIA.
The court also cautioned that out-of-court bond restructurings remain subject to other potential creditor claims, serving as a useful reminder that distressed companies and equity sponsors should follow best practices when pursuing these transactions.
David A. Brittenham
Richard F. Hahn
M. Natasha Labovitz
View More Authors
UK Modern Slavery Act Transparency Statement
Debevoise Login (2)
Debevoise Women's Review