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Indenture Breach Ruling leads to Windstream Bankruptcy
26 February 2019
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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.
Jeffrey E. Ross
Scott B. Selinger
Ramya S. Tiller
Ryan T. Rafferty
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