Three recent English law cases involving trustee The Law
Debenture Trust Corporation and investor Concord Trust have
scrutinized the responsibilities and liabilities of trustees.
Questions about how far trustees should go to protect
bondholder interests, as well as potential liability in an
event of default raise fundamental questions not only for
trustees, but also for investors, arrangers and issuers.
The litigation, called variously Concord, Elektrim
or Law Debenture, saw the parties involved go to Court
in London three times. The cases relate to €510 million
($671 million) 2% bonds due 2005 issued by Elektrim Finance,
guaranteed by Elektrim and constituted by a trust deed dated
November 15 2002.
Condition 10(d) of the deed includes a provision that 25% of
the bondholders acting together are entitled to appoint a
director to Elektrim's board. The balance of the Elektrim board
in certain circumstances can reject this bondholder-appointed
director. As usual, failure by the issuer or Elektrim...