The proposed $1.15 trillion omnibus spending bill unveiled in Congress late yesterday did NOT ultimately contain an amendment to the Trust Indenture Act (TIA).
The revelation provides a certain degree of certainty to corporate trustees – capping off a week of uncertainty about whether a change to the TIA would be pushed through in the spending bill without full consideration as standalone legislation. The prospect of an amendment to the TIA prompted a group of law professors, as well as a number of major asset managers, to write Congress imploring leadership to avoid amending the TIA suddenly in the whirlwind of the spending bill process instead of through separate, deliberative hearings. Please see our previous update for additional background on the last-minute effort to amend the TIA in the context of the federal spending bill.
Nonetheless, the omission of any TIA amendment in the spending bill left in place a broader uncertainty in the legal field and the debt markets about how Section 316(b) of the TIA is to be interpreted – and how minority bondholders are to be treated – in the wake of a number of outlier federal court decisions handed down in the past year (see our previous update for more).
Congress is slated to vote on the spending bill later this week. While the spending bill contains no TIA amendment and the TIA amendment was pulled at the last minute from the earlier federal transportation bill, it is possible that the amendment will resurface in the new year, whether as a rider to a larger bill, as in this instance, or as an independent regulation.