Informal bondholders’ committee
Produced in partnership with South Square Chambers and BDO

The following Restructuring & Insolvency practice note produced in partnership with South Square Chambers and BDO provides comprehensive and up to date legal information covering:

  • Informal bondholders’ committee
  • Who and what are bondholders
  • Formation
  • Role
  • Issues surrounding bondholders’ position
  • SIP 15 and accompanying guidance

Informal bondholders’ committee

Who and what are bondholders

Bondholders (sometimes also known as noteholders) have generally invested in a company’s most junior—and hence risky—debt. In a distressed situation, they will often become a pressure group, which will come together to try to extract some value from a restructuring by presenting a unified view to the debtor’s advisers and other stakeholders, including the senior lenders (see Practice Note: Bonds and notes for further details).

Bondholders will frequently be part of a complex capital structure.


The bondholders’ committee will generally be organised by either the indenture trustee for the bonds or a lawyer specialising in representing the interests of junior creditors.

The committee can also be known as:

  1. steering committee

  2. coordinating committee

  3. cocom

A committee is formed as part of a restructuring process rather than a formal insolvency process.

The formation of the committee can be prompted by a number of factors including:

  1. breach of banking or loan covenants

  2. poor trading and profits warnings

The committee will generally have no formal status or fixed membership, as the composition of the bondholder group may evolve due to the high liquidity and trading volumes of distressed junior debt (see Practice Note: Secondary trading of distressed debts for further details).

The interests within the bondholder group may diverge if some holders are also part of the secured or senior facility, or indeed other parts of the capital

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