Partner Seth Lieberman was quoted in the Law360 article, “EFH Bond Ruling Offers Costly Lesson For Creditors.” U.S. Bankruptcy Judge Christopher Sontchi recently refused to award Energy Future Holdings Corp. (EFH) bondholders the lost interest payments from a $4 billion refinancing. Judge Sontchi considered loan documents issued in 2010 to decide if creditors that had already recovered their principal debts should receive additional make-whole payments.

Litigation over early debt redemptions has shown that nothing short of ironclad indenture language will entitle bondholders to the future interest payments they lose out on when debtors refinance under bankruptcy protection. While Judge Sontchi’s decision didn’t completely eliminate the trustee’s ability to collect premiums, it marks a clear victory for EFH.

"Investors have taken notice, but many have still failed to secure the firmer contract language that bankruptcy judges have required. Such strict interpretations are becoming if not the law of the land, then at least the norm,” said Lieberman.

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