Banking and Finance | Law
The standard of care for indenture trustees after default is intolerably vague, generating cost and inefficiency in the public bond markets. Yet public bondholder governance is increasingly recognized as a critical component of the larger realm of corporate governance, and indeed more than eighty percent of capital market financing raised by U.S. corporations now occurs through public bond offerings. This article examines how that standard of care should be modified to make indenture trustees more effective.
Steven L. Schwarcz and Gregory M. Sergi, Bond Defaults and the Dilemma of the Indenture Trustee, 59 Alabama Law Review 1037-1073 (2008).