Issuer Owes No Contractual Duty to Noteholders to File Timely Reports with SEC — Fifth Circuit Agrees with Eighth

From Affiliated Computer Servs., Inc. v. Wilmington Trust Co., 2009 U.S. App. LEXIS 8011 (5th Cir. April 16, 2009):

Section 314(a) of the TIA [Turst Indenture Act] requires an issuer of bonds to file with the trustee copies of the annual reports which it is "required to file" with the SEC. See 15 U.S.C. § 77nnn(a). The Indenture also requires compliance with § 314(a), and ACS does not dispute that it was required to comply with the provision of the section. The dispute turns on the interpretation of § 314(a), which is a matter of first impression for this court. Wilmington Trust contends that § 314(a) requires ACS to provide copies of the reports it is required to file with the SEC regardless of whether ACS actually filed the reports. ACS argues that § 314(a) requires that it only file with the trustee the reports that it has in fact filed with the SEC. The district court held that § 314 obligates ACS to file with Wilmington Trust "copies of the reports and documents that ACS files with the SEC, but § 314(a) does not require that ACS file anything with the SEC."

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We find UnitedHealth's [UnitedHealth Group Inc. v. Wilmington Trust Co., 2008 U.S. App. LEXIS 24301 (8th Cir. Dec. 1, 2008)] reasoning persuasive. In this case, § 4.03 of the Indenture provides in part that "[ACS] shall file with the Trustee, within 15 days after it files the same with the SEC, copies of the annual reports . . . that [ACS] is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act." The unambiguous language of § 4.03 does not impose an independent obligation actually timely to file reports with the SEC. Rather, the phrase "that [ACS] is required to file" indicates those reports copies of which ACS is required to file with the Trustee. "[W]ithin 15 days after it files the same with the SEC" designates the time in which to file the reports with the Trustee. At best, the provision anticipates that ACS "is required to file" reports with the SEC pursuant to Section 13 or 15(d), but the provision neither incorporates the SEC's timing requirements nor imposes a deadline by which ACS must actually file the reports. We therefore hold that § 4.03 of the Indenture does not impose an obligation timely to file reports with the SEC.

See also our post of December 12, 2008, discussing the Eighth Circuit’s decision in UnitedHealth Group Inc. v. Wilmington Trust Co., 2008 U.S. App. LEXIS 24301 (8th Cir. Dec. 1, 2008).

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