Whether court supervised or independently run, liability management transactions require intensive coordination with clearing systems, custodians and the professionals advising the issuer. Lynchpin understands the needs of the working group as well as the bondholders and can guide the process from inception to final settlement. Often, the issuer needs to implement a restructuring support agreement prior to launching a full-blown event. Lynchpin can advise on the RSA to ensure air-tight execution that is carefully tied to the following vote. We can act as tender, consent or exchange agent to make sure bondholders receive offering materials and are prepared to vote before the deadline. If required, we can set up a website to post the offering documents and forms required to vote, collecting any ancillary documentation such as release forms or certifications, as well as account information and wire instructions. Our websites employ encryption and masking to ensure a high degree of security for sensitive bondholder information.
Schemes of arrangement involve careful planning and execution to ensure compliance with the procedures of the jurisdiction in which the scheme is pending. Lynchpin can set up schemes of arrangement with the clearing system, distribute notices and scheme documents, and provide any necessary affidavits for the court in connection with service of documents.
Restructurings often involved multiple types of new value, including not just new notes but also equity, loan participations or other financial instruments. Ideally, new securities will clear in the ICSDs and thus must be made eligible and ISIN codes must be obtained. Equities are often issued in local clearing systems which require separate custody arrangements and free-of-payment settlement. Distribution of cash proceeds requires accurate wire instructions, pre-advices and confirmations of receipt. Lynchpin set up and oversee the entire process, minimizing problems and ensuring a smooth settlement.
Clearing systems and courts want assurance that recalcitrant bondholders will not lose their entitlement because they were unaware a restructuring was under way, while issuers need certainty that their schemes won't be challenged by holders who missed the voting deadline. Similarly, custodians want to avoid litigation by clients over where the fault for missing the event lies. Residual trusts allow holders to come forward for a set period of time to claim their consideration and realize the value of their position without having to waste time and money assigning blame and pursuing remedies. The proceeds of such trusts can then be distributed in accordance with the terms of the trust as agreed by the creditors and issuer. Lynchpin can administer sunset trusts and deferred distributions allowing all parties to have confidence the Scheme will not be challenged.
The proceeds of restructured bonds can include loans, as well as restructured notes. Lynchpin can act as the primary administrator, calculating and directing payments of principal and interest, managing facilities and overseeing the distribution of proceeds. In the event a loan is in default, Lynchpin can handle the default administration, drafting notices and freeing up lenders' staff to focus on revenue-building activities rather than managing non-performing debt.
While Fiscal Agents act as a legal agent for the issuer, Trustees have a fiduciary duty to the bondholders and a higher standard of care in the event of a default. Issuers and bondholders often agree to replace the trustee on the original bonds with a fiscal agent on the restructured instruments. Flexibility and control over debt instruments are becoming increasingly important to issuers frustrated by large, institutional administration. Often, the relationship between the original trustee and the issuer becomes strained and difficult to manage. Lynchpin can act as Successor Paying Agent and Trustee or Fiscal Agent on restructured bonds, directing payments and fulfilling the roles previously served only by a handful of banks.
Pledging of security provides comfort to lenders and bondholders, and the agent holding such security must be reliable and ready to enforce if the time comes. Lynchpin can hold assets in a capacity as Security Trustee for bank creditors or bondholders.
The need for Escrow Services exists both in restructuring endeavors and in connection with new financings. Parties need to ensure that escrowed proceeds will be administered strictly in accordance with the agreement by an agent with integrity and experience. Lynchpin can help ensure the terms of the escrow are practical and unambiguous, and that the intention of the parties is achieved in the administration and termination.