Redemption of $130 Million Defeased Municipal Bonds – Challenge Thwarted

On May 18, 2011, on behalf of The Bank of New York Mellon Corporation, we successfully opposed a motion for a temporary restraining order in Emmet & Co., Inv. v. Catholic Health  East and The Bank of New York Mellon Corporation, a case in the United States District Court for the Southern District of New York involving approximately $130 million in principal amount of defeased municipal bonds.  A bondholder objected to the obligor’s plan to redeem the defeased bonds at par while offering holders the option of tendering their bonds for purchase by the obligor at 101% of the principal amount.  The Court found that the bondholder’s failure to post security in an amount sufficient to pay the defendants’ damages in the event that the defendants were wrongfully enjoined, as well as the bondholder’s delay until three business days prior to the scheduled closing to seek injunctive relief, prevented injunctive relief from being granted in its favor.
James Gadsden and Mark R. Zancolli represented the Bank of New York Mellon.

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