Commercial Division Blog

Posted: July 3, 2021 / Categories Commercial, Contracts

Offering Circular Cannot be Used to Help Interpret an Unambiguous Indenture

On June 28, 2021, Justice Reed of the New York County Commercial Division issued a decision in In the matter of U.S. Bank N.A., 2021 NY Slip Op. 50617(U), holding that an offering circular cannot be used to help interpret an unambiguous indenture, explaining:

The court is not persuaded that the Offering Circular should be considered in the matter at hand. Because the court has not found ambiguity in the contract, extrinsic evidence should not be considered. Serengeti cites several cases that stand for the proposition that various prospectuses can be considered in construing contract meanings. These precedents permit courts to consider governing documents to an agreement when interpreting the meaning of a contract. The Offering Circular, however, cannot be considered a governing document, because, as discussed above, the governing agreements for the Triaxx CDOs are the Indentures, Collateral Management Agreements, and Collateral Administration Agreements. Similarly unpersuasive is Serengeti's contention that the Offering Circular is part of a single transaction and is properly read and interpreted with the Indenture. Under New York law, in the absence of anything to indicate a contrary intention, instruments executed at the same time, by the same parties, for the same purpose, and in the course of the same transaction will be read and interpreted together, it being said that they are, in the eye of the law, one instrument. The Offering Circular is not an executed instrument, nor is it an instrument between the same parties. Because the Offering Circular is not an instrument of the contract, it constitutes extrinsic evidence that the court will not consider. The court notes, in any event, that the Offering Circular largely tracks the language of all of the provisions considered above. Even if the Offering Circular could properly be considered in this matter, it would not add support to either party's contentions.

(Internal quotations and citations omitted).

Schlam Stone & Dolan represents investors in actions against asset-backed security underwriters and trustees and in related proceedings, such as trust instruction proceedings, where a trustee seeks court guidance regarding the management of an indenture trust. If you or a client are asset-backed security investors and have questions regarding potential claims against a trustee or how to influence the trustee's prosecution of a put back or repurchase action, Contact our attorneys at