Indenture Trustee Duties: The Pre-Default Puzzle
32 Pages Posted: 14 May 2019 Last revised: 20 Jul 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: Suggested Citation