Post by serragoosenburg on Jan 21, 2017 0:39:32 GMT 4
On January 17, 2017, the Court of Appeals for the Second Circuit issued its long-anticipated opinion in Marblegate Asset Management, LLC v. Education Management Finance Corp., 1 ruling that Section 316(b) of the Trust Indenture Act of 1939, 15 U.S.C. § 77ppp(b) (the “Act”), prohibits only non-consensual amendments to core payment terms of bond indentures. The 2–1 ruling vacated and remanded the decision of the district court determining that the defendants (two affiliated note issuers and their corporate parent) violated Section 316(b) by engaging in a series of transactions that, while they did not amend the governing indentures, were designed to restructure the defendants’ debt in a manner that deprived non-consenting noteholders, including the plaintiffs, of their practical ability to collect payment on the notes. The Second Circuit opinion clarifies an issue that had caused substantial doubt and debate in the debt markets and provides debt issuers with broader ability under the Act to restructure debt outside of bankruptcy court.