Case Studies

Second Circuit Victory in Complex Financial Case

In 2013, the firm obtained a complete victory for an instrumentality of the Federal Reserve Bank of New York created in connection with the 2008 rescue of American International Group, in the U.S. Court of Appeals for the Second Circuit. The firm had prevailed in the District Court on summary judgment before Judge Jed Rakoff, and an appeal was taken by some of the parties. The case involved the interpretation of two CDO indentures, which were the subject of interpleader actions brought by the successor indenture trustee. The trustee sought a determination as to the proper allocation of funds to Class A-1 and Class A-2 noteholders. The indentures contained apparent inconsistencies and gaps in their waterfall provisions, which created uncertainty for the trustee in making its distributions.

The firm successfully argued to Judge Rakoff, and on appeal to Judges Pooler, Parker and Livingston, that (i) the apparent inconsistency should be resolved for the benefit of the Class A-1 noteholders as a result of a "notwithstanding" clause found in the waterfall (citing Bank of N.Y. v. First Millennium, Inc., 607 F.3d 905 (2d Cir. 2010)), and (ii) a gap in the indenture provisions should be filled by the Court for the benefit of the Class A-1 holders as a matter of law and without discovery, based upon the clear intent found in the document to subordinate the more junior noteholders' interests (relying in substantial part upon the Restatement (Second) of Contracts).

Resources

Telecommunications Company Corporate Debt Refinancing

In 2014, Patterson Belknap acted as issuer’s counsel in connection with the refinancing of corporate debt for a Barbados-based telecommunications company that owns and operates subsea fiber optic cable networks in the Caribbean, Central America and South America. The $1.25 billion multi-jurisdictional financing included a repayment of existing debt, the release of collateral in multiple jurisdictions and the listing of notes on the Luxembourg Stock Exchange. Since closing the refinancing, Patterson Belknap has advised the client as to covenant matters in connection with its sale of to a multinational telecommunications company headquartered in London.

Global Depositary Notes (GDNs) Counsel

Patterson Belknap has acted as counsel for a GDN depositary in developing sovereign debt-based GDN programs from 16 countries. In addition to performing the legal due diligence for each of the jurisdictions, the firm has assisted in structuring the GDN programs to address legal and practical issues raised by the legal and infrastructural requirements of each of these jurisdictions and in preparing the applicable transaction documentation.