U.S. Court of Appeals for the Second Circuit

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Second Court clarifies interpretation of Trust Indenture Act

January 17, 2017

The Second Circuit rejected the district court decision, holding instead that Section 316(b) of the TIA “prohibits only non‐consensual amendments to an indenture’s core payment terms.” The decision provided needed clarity for the corporate debt market

U.S. Chamber files amicus brief

September 16, 2015

The U.S. Chamber joined with the Loan Syndications and Trading Association to urge the U.S. Court of Appeals for the Second Circuit to reverse a district court decision that held Section 316(b) of the Trust Indenture Act (“TIA”) protects minority bondholders’ practical ability to receive payment.

The amicus brief argued that Section 316(b) protects only the legal right to payment, rather than the practical ability to collect. The brief explained that other legal remedies, not the TIA, protect against transactions that impair creditors’ practical ability to recover. It also argued that no limiting principle cabins the district court’s reading, and such an open-ended rule will inject new uncertainty into the $8 trillion corporate bond market.

George W. Shuster Jr., Danielle Spinelli, and Craig Goldblatt of Wilmer Cutler Pickering Hale and Dorr LLP served as counsel for the amici.

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