Two Recent District Court Decisions Give New Ammunition to Noteholders Opposing Nonconsensual Out of Court Restructurings

Two recent decisions from the influential District Court for the Southern District of New York may have strengthened the hands of unsecured noteholders in efforts to oppose nonconsensual out-of-court restructurings. Whether these decisions signal the beginning of a nationwide trend is not yet clear. What is clear, however, is that these decisions empower dissenting noteholders to use the provisions of the Trust Indenture Act of 1939 (Act) in order to prevent the diminution of their financial positions.