The U.S. Bankruptcy Court for the Southern District of New York recently held that an ad hoc committee of bondholders, holding $162.5 in senior secured bonds, lacked standing to participate in the issuer-debtor’s Chapter 11 bankruptcy case. In re American Roads LLC, 2013 WL 4601006 (Bankr. S.D.N.Y. Aug 28, 2013). This holding was premised on the prepetition financing documents, which included a no action clause that prohibited the bondholders from taking any actions to enforce their claims. Unlike with multi-tranche financing, here the financing documents provided for an “insured unitranche,” whereby all the bondholders were secured by the same lien. A monoline insurer then fully insured the bondholders’ claims for default, and in return the bondholders agreed to a “no action” clause that provided the insurer with the sole rights of enforcement upon a default by the debtor. Accordingly, the bankruptcy court held that the bondholders lacked standing to participate in the bankruptcy case and that only the insurer, and not the bondholders, could vote on the debtor’s plan of reorganization.