November 1, 2017

Revisiting Good Faith and Fair Dealing Challenges By Non-Participating Holders to Indenture Amendments Effectuated Through Use of Exit Consents

Whether as part of out-of-court restructurings brought on by financial distress or more ordinary corporate-finance transactions, issuers of notes under an indenture often effectuate exchange offers to swap one series of debt for another, or for some other security. At times, the issuer will require that those holders who exchange their notes give their consent to an amendment to the existing indenture essentially the instant before they turn in their notes—the so-called “exit consent.”

In a new article published in the Norton Annual Survey of Bankruptcy Law, 2017 Edition, Corporate Restructuring partner James Millar analyzes whether a violation of New York’s implied covenant of good faith and fair dealing has occurred when a company requires exchanging noteholders to provide exit consents, but the company does not make the offer available to all holders.

Read “Revisiting Good Faith and Fair Dealing Challenges By Non-Participating Holders to Indenture Amendments Effectuated Through Use of Exit Consents.”


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