Indenture Breach Ruling leads to Windstream Bankruptcy

26 February 2019
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Key takeaways:
  • On February 15th, a federal district court issued a judgment in favor of Aurelius Capital in U.S. Bank National Association v. Windstream Services, LLC v. Aurelius Capital Master, Ltd., finding that Windstream’s 2015 spin-off of its telecommunications assets, and subsequent “lease” of such assets was a sale-leaseback that violated its indenture. As a result of the decision and the corresponding cross-default to Windstream’s other indebtedness, Windstream filed for Chapter 11 bankruptcy on February 25, 2019.
  • The case is important because it highlights (i) the courts’ willingness to see past the form of a transaction and evaluate its substance and (ii) the importance of strict covenant compliance and coordination both among internal departments within a company and among a company’s advisors.