Bondholders' Rights

Australian companies are increasingly turning to corporate bonds for major capital raisings. This book, recognising that companies may sacrifice the interests of bondholders to achieve the best results for their shareholders, analyses the rights and remedies bondholders have against that occurring. Jackson Taylor shows how bondholders are affected by event risk and explains the major types of contractual covenants that are used to protect against it. The analysis notes the different practices often employed in the retail and institutional bond markets and the effect of conversion rights and the presence of senior bank lending. The effectiveness of these covenants in restraining prejudicial corporate conduct is considered in light of the remedies available under Australian law. The book then provides a comprehensive survey of the protection available under the general law for the large numbers of bondholders who lack adequate, or any, covenant protection. This reviews both well established legal rules (for example capital maintenance requirements and directors duties) and considers more innovative applications of regulation and doctrine (such as just and equitable winding-up and other Corporations Act remedies). In each case the focus is on the special circumstances applicable to the corporate bond context, illustrated with reference to American bondholder litigation and suggestions for how Australian law might resolve things differently.