Recent US Court Decisions May Limit Debt Exchange Offers and Restructurings

Two recent decisions by US federal district courts in the Southern District of New York could have a significant limiting effect on future debt consent solicitation, exchange offers with exit consents and, more broadly, out-of-court restructurings. The decisions indicate that federal courts may be taking a harder look at exchange offers and restructurings which could be deemed to impair, as a practical matter, the rights of dissenting bondholders to receive payment, even where the changes made in such transactions do not require unanimous consent under the governing indenture.

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For more information about anything covered in this memorandum, please contact Cecil Quillen, Patrick Sheil, Jeffrey Cohen, Pam Shores, Aaron Javian.