Debt Dialogue focuses on recent developments and recurring interpretive issues and principles that debt-focused investors commonly encounter. Members of our editorial team discuss matters regarding the interpretation, enforcement and documentation of debt, capital markets debt instrumentation, and credit facilities and other arrangements.
Topics covered in this issue include:
The Un-Section 316(b): The Different World of Individual Rights Under Credit Agreements
With the current interest being heaped on Section 316(b) of the Trust Indenture Act, now is 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.
Citibank v. Norske: Enjoining Violations of Indentures? – Not So Fast
Citibank, NA London Branch v. Norske Skogindustrier ASA (S.D.N.Y. March 2016), illustrates the difficulty of obtaining injunctive relief against prospective indenture violations of a financially troubled issuer.
Indentures Meet the Securities Laws: Interpreting Change of Control Provisions in Foresight Energy L.P.
Wilmington Savings Fund Society, FSB v. Foresight Energy L.P. (Del. Ch. December 2015), offers an instructive foray into the determination of beneficial ownership under Section 13(d) and Rule 13d-3 of the Securities Exchange Act of 1934 and its implications for common changes of control provisions.
No-Action Clauses In Lawsuits Against The Trustee
Blackrock Core Bond Portfolio v. U.S. Bank National Association (S.D.N.Y. February 2016), revisits a long running question of the extent to which no-action clauses apply to suits against the trustee of an indenture.
Implied Right of Action Against Trustees Under the TIA
In two recent cases arising out of the RMBS meltdown of the preceding decade, courts confirmed that aggrieved bondholders have an implied right of action under certain provisions of the Trust Indenture Act of 1939.
Duties of a Trustee Prior to Default: A Tale of a Lapsed UCC Filing
Eastern District of Pennsylvania, Becker v. Bank of New York Mellon Trust Company, N.A (E.D. Pa. March 2016), suggests that a court could impose liability on a trustee for failing to act prudently even before an event of default, at least under indentures not governed by the Trust Indenture Act.