Terms of an indenture are clear, says Second Circuit

Orchard Hill Master Fund v. SBAC Corp., No. 15-3462 (2d Cir. July 21, 2016) (Hall, J.):  An indenture is merely a contract between a bond issuer (i.e., the company that issues the bond) and the bondholders. The term comes from the phrase an "indenture of retainer," which was a contract written in duplicate on the same sheet with the copies separated by cutting along a jagged (toothed, hence the term "indenture") line so that the teeth of the two parts could later be refitted to confirm authenticity of the contract.

Orchard Hill Master Fund involved a dispute over an indenture.  Bondholders who had converted their bonds into equity or cash alleged that the issuer still owed them a final interest payment.  The district court dismissed the claim with prejudice on the ground that there was no reasonable interpretation of the underlying contract that entitled the plaintiffs to both the benefits of the conversion and the final interest payment.

There isn't much more to say about the Second Circuit's decision to affirm except that if the bondholders were willing to sue and then appeal, someone misunderstand what the contract said and it costs the bondholders a good deal of money.  All I can say is that every lawyer who drafts or reviews a contract should have a copy of A Manual of Style for Contract Drafting by Ken Adams.  Following Ken's blog is a very good idea too.

Decision here:  http://cases.justia.com/federal/appellate-courts/ca2/15-3462/15-3462-2016-07-21.pdf?ts=1469111406

Ken Adam's book here:  https://www.amazon.com/Manual-Style-Contract-Drafting/dp/1614388032

Ken Adam's blog here:  http://www.adamsdrafting.com/blog/