Giving Bondholders a Vote in Debt RestructuringBy
Mark J. Roe is a professor at Harvard Law School. He wrote “The Voting Prohibition in Bond Workouts,” published in The Yale Law Journal.
The underlying problem is that since the 1930s, the securities laws has barred basic free contracting among bondholders, via the Trust Indenture Act of 1939. Although the ban is exceedingly poor — one can think of few groups less in need of contractual guidance in the United States than institutional bondholders — the lurking amendment would worsen the plight of the bondholder…
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