On September 16th, the LSTA filed an amicus brief in connection with an appeal to the U.S. Court of Appeals for the 2nd Circuit of a recent case decided in the Southern District of New York which could have important consequences for the market for distressed debt.  In Marblegate Asset Management v. Education Management Corp. (“Marblegate II”) Judge Katherine Polk Failla, interpreted Section 316(b) of the Trust Indenture Act (“TIA”) expansively, giving rise to concerns that bondholders could exert additional leverage in out-of-court restructurings. The LSTA’s brief argues that the court misread Section 316(b) of the TIA by expanding its reach from the legal right of minority bondholders to receive payments of principal and interest to any action that might have the practical effect of making it more difficult to receive payment.