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GLOSSARY

Distressed securities definition

Published by a LexisNexis Corporate expert

What does Distressed securities mean?

The equity and debt of companies that are in, or near insolvency, or in a similar state.

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Enforcement of debt securities

Enforcement of debt securities Who can enforce? The question of who can bring enforcement proceedings against a bond issuer depends principally on whether the issue of the bonds has been structured with a trustee or a fiscal agent. When a trustee has been appointed, the trustee is generally able to enforce on behalf of the bondholders. When a fiscal agent has been appointed, it is incumbent on the bondholders to enforce their rights against the issuer. The fiscal agent has no role in enforcement. For information on the key parties in a debt capital markets transaction, see Practice Note: Parties in an issue of debt securities. For more information on the different issues that arise based on whether the bond issue is structured using a trustee or a fiscal agent, see Practice Note: Parties in an issue of debt securities—Fiscal agent or trustee. Where the bonds are issued in global, rather than definitive form (as is invariably the case with debt securities issued in the international capital...

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What are collective action clauses and why are they used in sovereign bond documentation?

What are collective action clauses and why are they used in sovereign bond documentation? What are collective action clauses? Collective action clauses (CACS) are provisions contained in the terms and conditions of debt securities which: • allow a specified majority of holders of the securities to agree to a change in the terms of the securities proposed by the issuer, and • make any change so agreed binding upon all holders of the securities, including any who oppose the proposed change The main purpose of a CAC is to facilitate a rescheduling of the debt securities. If the issuer can agree rescheduled terms with the specified majority, the CAC will prevent minority holders from continuing to claim full repayment. A CAC makes it harder for investors such as distressed securities funds (sometimes known as vulture funds) to acquire securities cheaply and then obstruct the rescheduling or press for repayment on better terms than those agreed by the majority. Investors who do this are known as holdouts....

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