Outstanding
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The Law and Lore of Repackaging
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Outstanding
/aʊtˈstændɪŋ/ (adj.)
Of a debt security, live, still out there, not yet redeemed. A piece of paper with a shot in its locker.
A simple enough thought, but one which is not beyond our learned fiends to complicate. Now, here is one of those times that the JC sides with the machines.
In a valiant, but ultimately foolish, attempt to reduce a mushy and tiresome definition of “outstanding” in a Note prospectus to something simple, the JC proposed this:
Outstanding: All the Notes in issue that have not been redeemed, purchased and cancelled or become void under their Conditions.
This came back in the mail, with a note of costs, marked back up to more or less how it started:
Outstanding or outstanding: in respect of the Notes of a Series, all the Notes of such Series issued except:
- (a) those that have been redeemed in accordance with the Conditions;
- (b) those in respect of which the date for redemption has occurred and the redemption moneys (including all interest accrued on such Notes to the date for such redemption and any interest payable after such date) have been duly paid to the Trustee or to the Paying Agent as provided and remain available for payment against presentation and surrender of Notes;
- (c) those that have become void or in respect of which claims have become prescribed;
- (d) those that have been purchased and cancelled as provided in the Conditions;
- (e) those mutilated or defaced Notes that have been surrendered in exchange for replacement Notes;
- (f) (for the purpose only of determining how many Notes are outstanding and without prejudice to their status for any other purpose) those Notes alleged to have been lost, stolen or destroyed and in respect of which replacement Notes have been issued; and
provided that, for the purposes of:
- (i) ascertaining the right to attend and vote at any meeting of the Noteholders or to be taken into account for the purposes of any Noteholder Resolution and any direction or request by the holders of the Notes;
- (ii) the determination of how many Notes are outstanding for the purposes of enforcing Security;
- (iii) the exercise of any discretion, power or authority that the Trustee is required, expressly or impliedly, to exercise in or by reference to the interests of the Noteholders; and
- (iv) the determination by the Trustee whether any event, circumstance, matter or thing is, in its opinion, materially prejudicial to the interests of the Noteholders,
those Notes that are beneficially held by or on behalf of the Issuer and not cancelled shall (unless no longer so held) be deemed not to remain outstanding;
There is no universe in which the concept of outstanding is so doubtful that you need to waste that much ammunition on it. This is a combination of statements of the logically incontrovertible ((a), (c), (d) and (e)), the practically non-existent since the invention of the computer ((e) and (f)) and the manifestly untrue ((b)).
In a fit of exasperation, the JC asked NiGEL, his friendly little chatbot, to translate that mass of sludge back into a sentence of no more than 20 words. NiGEL, bless him, came up with this:
“Outstanding” means all Notes issued except those redeemed, void, cancelled, or replaced. Notes held by the Issuer are not outstanding.
Exasperated Kermit face. Doubly exasperating, actually, because NiGEL’s attempt is marginally better than the JC’s original attempt.
It did lead the JC to wonder, Rick Deckard-like, whether he is not, himself, after all, a replicant. This would make a great play.
Having said that, I have just had the mental image of seeing the JC as Rick Deckard in Blade Runner, but Deckard’s revelation comes not as he is hanging by his fingers off a dripping building, picked out by swatching searchlights while Rutger Hauer moodily stamps on his dislocated fingers and riffs improvised interstellar war poetry at him, but in generic conference room, facing off against a Linklaters capital markets associate in a beige cardigan armed only with an infinite capacity for soul-crushing detail about implausible contingencies.
So, actually, it wouldn’t make a good play at all. It really, really wouldn’t.
What it would make is an excellent case study in why the legal industry has no need, whatsoever, to fear the revolutionary impact of large language models. Why? Because of the Buttocractic Oath. Legal discourse does not proceed according to tenets of crystalline logic. It proceeds according to the posterior-covering, even-if-it-is-broke-I-won’t-get-in-trouble-as-long-as-I-wasn’t-the-one-who-tried-to-fix-it fear of those engaged in the professional services industry.