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Abstract
In an opinion that could have implications for bond issuers who are delinquent in their reporting obligations with the Securities and Exchange Commission, a New York state trial court has ruled (on a motion for summary judgment) that BearingPoint breached its indenture reporting obligations when it failed to file periodic reports with the indenture trustee within the periods prescribed by the SEC. The BearingPoint decision includes not only a broad interpretation of language found in many indenture reporting covenants but a broad reading of a Trust Indenture Act (TIA) reporting provision that is incorporated in every indenture that is qualified under the TIA. This decision arrives at a time when many issuers are unable to meet SEC reporting requirements for a variety of reasons, including ongoing investigations related to stock option backdating concerns. In the BearingPoint case, BearingPoint failed to file, within the time period required by the SEC, its annual and quarterly reports on Form 10-K and Form 10-Q for a variety of publicly announced reasons, including the existence of material weaknesses in BearingPoint's internal controls and problems related to the implementation of a new financial accounting system.