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.”

Read the full opinion piece, Congress Never Intended Windfall for Bond Holdouts.