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April 23, 2017

Keeping Marblegate in Perspective: Implications for Debt Restructurings, Indenture Amendments and New Bond Issues

Keeping Marblegate in Perspective: Implications for Debt Restructurings, Indenture Amendments and New Bond Issues

Involuntary debt restructurings that lead to impairing a bondholder’s to receive payment may violate the Trust Indenture Act. It was lately locked in the Marblegate/Education Management Corp. bondholder litigation. An initial read from the situation suggests potentially problematic implications. A much deeper analysis shows a less troubling decision. The situation can also be relevant for that 144A for existence market that’s technically not susceptible to the statute.

– Involuntary debt restructurings may violate the Trust Indenture Act when they lead to impairing a bondholder’s to receive payment, while they leave that right formally intact. Which was lately held through the court within the Marblegate/Education Management Corp. bondholder litigation. The SDNY’s recent opinion around the merits (Marblegate II) confirmed its earlier waiting on hold a request an initial injunction to bar the restructuring (Marblegate I).

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1 Marblegate Asset Management v. Education Management Corp. (SDNY 2015).
2 Marblegate Asset Management v. Education Management Corp. (SDNY 2014).
3 Meehancombs Global Credit Opportunities Funds, LP v. Caesars Entertainment Corp. (SDNY 2015).
4 In re Northwestern Corp., 313 B.R. 595 and YRC Worldwide Inc. v. Deutsche Bank Trust Co. Americas (D. Kan. 2010).

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