Opinion ID: 2616
Heading Depth: 4
Heading Rank: 1

Heading: Trust Indenture Act

Text: The Trust Indenture Act protects the holder of a bond issued under a qualified indenture from majority-imposed impairment of its rights. It provides that the right of any holder of any indenture security to receive payment of the principal of and interest on such indenture security. . . shall not be impaired or affected without the consent of such holder. 15 U.S.C. § 77ppp(b). As Argo acknowledges in its brief, however, [o]f course, the TIA cannot prevent the reorganization of a debtor under U.S. bankruptcy laws. Indeed, [i]t is self-evident that Section 316(b) could not have been intended to impair the capacity of a debtor and its creditors to restructure debt in the context of bankruptcy, and [t]he cases have uniformly recognized that reorganization proceedings in Chapter 11 are not within the purview of TIA Section 316(b). In re Delta Air Lines, Inc., 370 B.R. 537, 550 (Bankr. S.D.N.Y.2007), aff'd 374 B.R. 516 (S.D.N.Y. 2007); see also In re Bd. of Dirs. of Multicanal S.A., 307 B.R. 384, 388 (Bankr. S.D.N.Y.2004) ( Multicanal I ) (observing that a creditor conceded, as it must, that the rights of holders to principal and interest on bonds issued under a TIA-qualified indenture can be impaired by bankruptcy proceedings). Because, as Argo concedes, TIA protected bonds are subject to restructuring under the United States' bankruptcy law, and because Section 304 is part of our bankruptcy law, a bankruptcy court may grant enforcement of foreign insolvency proceedings that restructure TIA protected bonds so long as recognition of those proceedings is otherwise valid under Section 304. [12] Such a holding would turn the principle of comity on its head and would fail to promote a friendly intercourse between the sovereignties particularly necessary in bankruptcy proceedings. Hilton, 159 U.S. at 165, 16 S.Ct. 139 (internal quotation marks omitted).