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Court of Chancery Interprets Indenture

Wilmington Trust Co. v. Tropicana Entertainment LLC, C.A. 3502-VCN (Del. Ch. February 29, 2008)

The Court of Chancery rarely interprets bond indentures; so in the spirit of the date of this decision, the Court did so here. What is particularly interesting about this case is the way the Court reasoned to the result. While focusing on the specific language of the indenture, the Court did not hesitate to apply that language to circumstances that probably were not considered by the drafters. In this very un-Justice Scalia way, the Court held the indenture was violated.

The lesson here is that the Court is very realistic about what language should mean in the business world. It will not be swayed by hyper-technical interpretations that are not what the drafters would have said had they focused on the circumstances at hand. This does not mean that the Court will stretch language beyond what it really means, however. Instead, a sort of middle ground of interpretation is the mark of Delaware law in this regard.



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