Second Circuit Reverses Marblegate Decision

Trust Indenture Act Section 316(b) Limited to Actual Amendments to An Indenture's Core Terms

Seyfarth Synopsis: On January 17, 2017, in a 2-1 decision in Marblegate Asset Management, LLC v. Education Management Finance Corp., (15-2124) (the "Decision"), the United States Court of Appeals for the Second Circuit (the "Second Circuit") held that "Section 316(b) [of the Trust Indenture Act of 1939] prohibits only non-consensual amendments to an indenture's core payment terms," Decision at 4, reversing the decision of the United States District Court for the Southern District of New York (the "District Court"), Marblegate Asset Management, LLC v. Education Management Corp., 111 F. Supp.3d 542 (S.D.N.Y. 2015), which held that a series of transactions meant to restructure the debt of Education Management Corporation ("EDMC") outside of bankruptcy over the objections of certain unsecured noteholders violated Section 316(b) of the Trust Indenture Act of 1939 ("TIA"), 15 U.S.