Moses & Singer

Indenture Bars Guarantor's Defenses Based on Allegations Trustee Failed to Keep Records and Act in Good Faith

March 2015

By: Mark N. Parry, David Rabinowitz, and Alan Kolod

Moses & Singer Alert

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A recent decision demonstrates the importance of drafting the monetary obligations of the issuer and any guarantors under an indenture to preclude their assertion of affirmative defenses based on the Indenture Trustee's arguable failure to perform its obligations under the indenture, which are usually for the benefit of the noteholders rather than the issuer or a guarantor. The decision also contains a concise statement of what the Indenture Trustee must establish to obtain summary judgment and avoid protracted litigation concerning its own performance. 

 

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