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Municipal Debt: Methods for Restructuring

OnDemand Webinar (88 minutes)

Gain an understanding of in depth issues surrounding common types of restructuring including current and advance refundings.Many participants in the municipal marketplace are not aware of all the tools that are available to them to restructure municipal debt, whether in stable or distressed financial situations. Lack of knowledge about municipal debt restructuring options could lead to additional costs for the municipality, reduced return for debt holders and potential negative effects on the municipal debt market generally. Not all situations are created equal. For instance, a healthy municipality may wish to restructure its debt using current refundings or advance refundings to take advantage of lower interest rates or less restrictive borrowing terms and conditions. In other situations, a municipality may be distressed and both the municipality and the holders of its debt may pursue strategies to restructure the municipality's outstanding debt as a means of avoiding a much worse outcome down the road. If the House of Representatives' version of the Tax Cuts and Jobs Bill becomes law, a healthy municipality may no longer have the benefit of using tax-exempt advance refundings to restructure its debt. This topic will help those in the municipal marketplace identify the various techniques available for restructuring municipal debt to achieve lower borrowing costs and other benefits that will be preserved, and other techniques that will be expanded or created as alternatives to tax-exempt advance refundings, if the Tax Cuts and Jobs Bill becomes law. Additionally, you will learn about the municipal debt restructuring methods available to municipalities and debt holders in distressed situations.

Authors

Laura E. Appleby, Chapman and Cutler LLP Latrice M. Phillips, Chapman and Cutler LLP

Agenda

Introduction

• Overview of Available Restructuring Before Debt Becomes Distressed

• Distressed Restructuring

Healthy Restructuring

• Overview of the Legislative Outcome of the Tax Cuts and Jobs Bill and Its Impact on Municipal Debt Restructuring Options

• Current Refundings

• Taxable Refundings

• Derivative Products

• General Issues to Consider in Municipal Debt Restructurings

• Typical Documentation That Is Required for Healthy Municipal Debt Restructuring

Out-Of-Court Restructurings

• Understanding the Collateral Package and/or Revenue Pledge

• Importance of Understanding Governing Documents

• Agreement Is Required - Diverse Bondholders or Recalcitrant Governing Bodies May Present Impediments to Out-Of-Court Restructurings

Non-Bankruptcy Rights and Remedies

• State Law Rights and Remedies -- Such Remedies Depend on the Particular State in Which the Default Occurred and the State Law Under Which the Debt Was Issued

• "Dillon's Rule States" vs. "Home Rule States"

• Potential Section 10(b) Claims on the the Securities Exchange Act of 1934

Municipal Bankruptcy - Chapter 9

• Threshold Requirements to File a Municipal Bankruptcy Petition

• Debt Treatment - General Obligation Debt, Special Revenues, Statutory Liens, Pension Obligations and Unsecured Debt

• The Plan of Adjustment

Additional Formats

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