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Corporate Alert: Recent Case Law Impacting Debt Transactions

April 8, 2015

Summary: Two recent decisions of the US District Court for the Southern District of New York may complicate future debt exchange offers. The cases address the validity, under the Trust Indenture Act of 1939, as amended, of indenture amendments that delete substantive covenant protections in the context of out-of-court debt restructurings. Such amendments are a common feature of debt exchange and cash tender offers and are often essential to achieve a restructuring outside of bankruptcy court. Kaye Scholer recently represented the debtor in a significant out-of-court restructuring in which these issues were addressed. While the ultimate impact of these cases on restructuring transactions is yet to be determined, we briefly summarize the cases below and outline some of their potential effects.

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Christopher P. Peterson
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Christopher J. Konieczny
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