Excluding fiduciary duties: how far should trustees be able to go? Lessons from bond issues


This article considers the role of trustees, and the importance of their duties, specifically in the context of bond issues and structured finance.

Security and bond trustees, or their affiliates, often have interests in the Issuer’s debt or equity. This is problematic and can give rise to what would be breaches of fiduciary duty, but for duty defining clauses and exemption clauses. The policy question is: how free should parties be to waive their fiduciaries’ conflicts of interests? Waivers are particularly problematic when made in advance, in standard documentation, in respect of tradeable interests: bonds and loan participations. These clauses should be subject to greater statutory and judicial control.

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Filed Under: JIBFL

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