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Abstract: 

In this article, the author discusses key issues in creditor standing to challenge (or otherwise bring litigation related to) liability management-related transactions. The author begins by providing an overview of “no-action” clauses in credit agreements and bond indentures and describes how such clauses may be used by defendant lenders and/or borrowers to seek dismissal of certain litigation claims brought by plaintiff individual or minority lenders and bondholders. The author also discusses some recent decisions that address the application of no-action clauses generally, the difference between direct and derivative claims and how creditor standing is affected by the bankruptcy process.

Keywords: Lender Standing; No-Action Clauses; Direct vs. Derivative Claims

Affiliations:  1: King & Spalding LLP.