Indenture Trustee Duties: The Pre-Default Puzzle

32 Pages Posted: 14 May 2019 Last revised: 21 Nov 2019

Date Written: May 11, 2019


This Article addresses a topic at the intersection of finance, agency, contract, and trust law: the pre-default duties of an indenture trustee for bondholders. The existing scholarship on indenture trustee duties focuses on the post-default scenario, when the indenture trustee is required to act as a prudent person in like circumstances on behalf of the bondholders. No prior scholarship addresses an indenture trustee’s pre-default duties. It is critical to try to define those duties because activist investors in the $42-trillion-plus bond market increasingly are making pre-default demands on indenture trustees, requiring them to know how to respond.

Keywords: indenture trustee, bonds, finance, pre-default

JEL Classification: F38, K22

Suggested Citation

Schwarcz, Steven L., Indenture Trustee Duties: The Pre-Default Puzzle (May 11, 2019). University of Cincinnati Law Review, Vol. 88, No. 3, 2019 (Symposium issue on the business uses of trusts.), Duke Law School Public Law & Legal Theory Series No. 2019-39, Available at SSRN: or

Steven L. Schwarcz (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7060 (Phone)
919-613-7231 (Fax)

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