News & Events

In a case closely watched by participants in the debt markets, the firm represented Petrohawk Energy Corp. in a Delaware Court of Chancery suit brought by an Indenture Trustee alleging that the merger of Petrohawk and KCS Energy, Inc. triggered a change of control provision in a KCS bond indenture for several reasons, and required Petrohawk, as successor to KCS, to offer to redeem the notes immediately at a premium.  Vice Chancellor Leo E. Strine, Jr. granted summary judgment to Petrohawk, holding that bondholders’ rights are limited to the protections bargained for in an indenture, and that asserted technicalities which do not violate the plain language of an indenture do not trigger a default. The Court noted that Petrohawk and KCS structured the merger to avoid triggering the change of control provision, but held that issuers of corporate debt are free to structure corporate transactions in a manner that purposely seeks to avoid triggering restrictive covenants.

On January 23, the Delaware Supreme Court held oral argument, and issued a few hours later an order unanimously affirming the Court of Chancery's rejection of the bondholders' claims.

The STB team consisted of Joe McLaughlin, George Choundas, Bill Ferullo, Patrick Shilling, Agnes Dunogue and Marcelo Gonzalez.