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Counsel Harald Halbhuber (New York-Capital Markets) wrote an opinion piece, titled "Congress Never Intended Windfall for Bond Holdouts," that was published by Forbes on September 23.
Counsel
Harald Halbhuber (New York-Capital Markets) wrote an opinion
piece, titled "Congress Never Intended Windfall for Bond
Holdouts," that was published by Forbes on September
23.
In his commentary, Halbhuber looks at recent court cases that
have severely constrained what distressed companies and their
creditors can do in debt restructurings to prevent holdout
bondholders from benefitting from the sacrifices made by other
creditors in staving off bankruptcy. These cases are based on the
Trust Indenture Act, which has recently been interpreted not only
to prohibit impairing a bondholder's legal right to payment,
but also transactions that affect their actual recovery on the
bond. Halbhuber contends that such a construction is contrary to
Congress' intent in enacting the law back in 1939.
"Holdout bondholders that believe they are being treated
unfairly should make their case just like other creditors, on the
basis of the contract or on equitable grounds," Halbhuber
says. "There is no evidence that Congress intended windfall
recovery for them."
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