Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

The Bankruptcy StrategistKickerFeaturesTopicsCommercial LawSectionsNewsLJN Newsletters

Predicting Bondholder Activism

By J. Andrew Rahl, Jr.
February 26, 2007

Concerted action by public bondholders can be counted upon to attract attention in both the financial markets and the financial press. A current topical example is the wave of public debt refinancings, consent solicitations and conversion price resets that has ensued from enforcement of bondholder remedies for financial reporting covenant defaults (e.g., Peter Lattman and Karen Richardson, Hedge Funds Playing Hardball with Firms Filing Late Financials. The Wall Street Journal, Aug. 29, 2006, at A1). As the title of that article suggests, the image of bondholder activism in many quarters is one of rapacious bondholders aggressively pursuing a ruthless quest for returns. The reality is far more complex, but the outcome of particular cases may be surprisingly predictable for the astute analyst.

Bondholders unquestionably have become progressively more active and assertive over the course of the last three business cycles. That said, the course of many bondholder induced refinancings and restructurings it is possible to predict with some success in light of the considerations discussed in this article. These include: the current highly liquid market environment, the investment strategies of the particular holders of a given bond or note issue, the amount of it which is outstanding, and the dynamics of the bondholder committee process.

This premium content is locked for LJN Newsletters subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
The DOJ's Corporate Enforcement Policy: One Year Later Image

The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.

Use of Deferred Prosecution Agreements In White Collar Investigations Image

This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.

The DOJ's New Parameters for Evaluating Corporate Compliance Programs Image

The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.

CLE Shouldn't Be the Only Mandatory Training for Attorneys Image

Each stage of an attorney's career offers opportunities for a curriculum that addresses both the individual's and the firm's need to drive success.

A defendant in a patent infringement suit may, during discovery and prior to a <i>Markman</i> hearing, compel the plaintiff to produce claim charts, claim constructions, and element-by-element infringement analyses.