Restructuring credit event after Ardagh – CDS reforms for high-yield credits

On July 28, 2025, Ardagh, a European producer of glass and metal packaging, announced the signing of a comprehensive recapitalization transaction.^[2] The proposed transaction contemplated that, among other things, Senior Secured Notes (the SSNs) issued by Ardagh Packaging Finance plc (Ardagh Finance) would be exchanged for new second-lien debt and that Ardagh Finance’s Senior Unsecured Notes (the SUNs) would be exchanged for equity in a new entity. A framework for the transaction was memorialized in a transaction support agreement (the TSA) agreed between the company, its controlling shareholder, and certain noteholders.

Following this announcement as well as later on, in each case shortly after several subsequent company announcements, ISDA’s EMEA Credit Derivatives Determinations Committee (the DC) was requested by a group of CDS protection buyers to determine whether (and when) a Restructuring credit event had occurred with respect to Ardagh Finance, the CDS reference entity.

The relatively early nature of those requests—almost two months prior the earliest date as of which the debt reorganization could plausibly become effective—was no coincidence. Rather, these requests appeared to be deliberately designed to trigger the CDS contracts as early as possible, before the SSNs and SUNs would be exchanged for new debt or equity, respectively. This is because CDS settlement payments are based on the differential between the par and the final (recovery) value of a Reference Entity’s deliverable obligations (i.e., qualifying obligations) and inherently depend on the availability and value of those obligations (and in particular the “cheapest” such obligation) at the time of the relevant credit event. If the Restructuring credit event was triggered before settlement of the debt reorganization, the CDS contracts would settle on the basis of the final price of the SUNs (which were the “cheapest” deliverable obligation in the capital structure) or the equity into which the SUNs were converted. Conversely, if the Restructuring credit event was triggered upon effectiveness (i.e., closing) of the debt reorganization (or if the relevant credit event determination request was made to the DC after that time), the CDS contracts would settle on the basis of the final price of the restructured second-lien debt. Put another way, because the SUNs had been trading in the mid-30s and the restructured second-lien debt was anticipated to trade very close to par, CDS protection buyers stood to lose virtually the entire value of their CDS contracts to the benefit of CDS protection sellers if it were determined that the Restructuring credit event was not triggered until the closing of the transaction.

The timing of the credit event turned on the meaning of “Restructuring” under Section 4.7 of the Definitions. As relevant here, a “Restructuring” occurs when any one of a number of specified events—in the present case, a reduction in the amount of principal (by way of the exchange of existing debt for equity in a new entity (the “equitization”))—“occurs in a form that binds all holders of such Obligation, is agreed between the Reference Entity or a Governmental Authority and a sufficient number of holders of such Obligation to bind all holders of the Obligation or is announced . . . by the Reference Entity or a Governmental Authority in a form that binds all holders of such Obligation.” (emphasis added). 

As the company released additional information over the next few weeks, the DC held a series of votes. A supermajority of the DC concluded that no Restructuring credit event had occurred based on the announcement of the TSA and the fact that Ardagh had received support from 90% of holders of both the SUNs and SSNs. The DC observed, among other things, that the TSA had termination rights and that “implementation of the recapitalization is also contingent on satisfying the conditions precedent that are contained in the TSA and any further conditions precedent that may be included in the long form transaction documents.”^[3] But agreement proved elusive as to subsequent questions, and the DC continued to struggle to achieve the requisite supermajority with respect to determination requests submitted later in the process,^[4] such as following Ardagh’s announcement^[5] that it had “obtained the consents needed to implement the” “recapitalization transaction . . . in respect of the Existing SSNs and the Existing SUNs on a consensual basis.”

At a high level, the relevant company actions and DC outcomes were as follows, which can be understood as a menu of potential trigger points:

The impasse forced referral to an external review panel (external panel, and with respect to the external panel in this instance, the Panel) of three King’s Counsel—senior UK lawyers—a procedure available under the DC Rules when the DC cannot reach a supermajority^[27]. Under those Rules, questions as to which the DC cannot reach a supermajority are referred to an external panel of independent lawyers, whose determination is binding on the DC^[28]. In this case, the DC grouped together the pending Restructuring questions that had failed to achieve a supermajority and referred them collectively to the Panel. 

Under the External Review procedure, each group of DC members supporting a particular position identifies “Advocates” to submit written materials and participate in oral arguments on their behalf; any ISDA member may also submit an amicus brief.^[29] The DC Rules then direct the external panel in question to choose one of the presented positions as the “better answer.” While this mechanism is not designed to generate a definitive or precedential interpretation of the relevant provisions, it would likely be difficult for the DC to entirely disregard the decision when presented with similar facts in the future.^[30] 

Following briefing and oral argument, the Panel concluded that the “better answer” was that a Restructuring credit event had occurred by October 7, 2025—the earliest date possible based on the questions submitted, and well before the key aspect of the restructuring itself (the debt-for-equity swap) was consummated—and even before the debt-for-equity swap had been approved as a technical matter as required under the terms of the debt itself.^[32]

In reaching that conclusion, the Panel arrived at two key determinations. 

First, the Panel interpreted Section 4.7(a) and, in particular, what it called “Limb 2”—i.e., an event “is agreed between the Reference Entity or a Governmental Authority and a sufficient number of holders of Such Obligation to bind all holders of the Obligation.” Decision, ¶ 8(a). The Panel concluded that Limb 2 requires three elements: (1) an agreement; (2) between the Reference Entity and one or more holders of the Obligation; and (3) the number of holders who have reached agreement must be sufficient to “bind” all holders.^[33] 

In so holding, the Panel agreed with the “Yes” position that although Limb 2 is “principally directed towards collective action clauses,” “a relevant agreement with a sufficient number of noteholders may nevertheless still bind all noteholders even if that agreement has not yet been implemented and even if it is subject to conditions to implementation (as distinct from conditions precedent to the existence of the agreement at all).”^[34] In reaching this conclusion, the Panel declined to consider DC decisions that had arguably treated conditionality as precluding a binding effect, stating that “[q]uite apart from any technical issues as to the relevance, on a pure question of interpretation, of such previous decisions, the information on each was necessarily skeletal, such that we did not consider it safe to draw any assistance from them.”^[35] 

Second, the Panel applied that interpretation to Ardagh and found that the TSA combined with the launch of pre-agreed consent solicitations operated to bind—by the effect of the indentures’ collective action clauses—all noteholders to transactions that could trigger a Restructuring credit event.^[36] Thus, the Restructuring credit event had occurred by October 7, 2025 when the request was made to the DC—and, under the Panel’s reasoning, technically as early as September 29, 2025 (the date of the launch of those consent solicitations). That was because, among other things, the consent solicitations for both the SSNs and the SUNs “were already agreed by over 90% [of] value of noteholders,” and under the TSA, both the supporting noteholders and the company were contractually obligated to pursue and implement the transactions.^[37]

Taken together, these decisions meant that the Restructuring credit event occurred well before the restructuring itself was actually implemented. 

The Panel’s determination meant that the CDS were triggered no later than October 7, 2025 and that the DC would now need to address a second, distinct question: what obligations qualified for delivery at the CDS settlement auction (so-called “Deliverable Obligations”)? This subsequent process played out in the weeks following the Panel’s December 15, 2025, decision.

To qualify as a “Deliverable Obligation,” an obligation requires an “Outstanding Principal Balance” of “greater than zero” at both the credit event request and delivery dates, based on the “terms of the obligation.” Definitions, §§ 3.2 & 3.8. That determination was critical because, as described above, the obligations deliverable at auction can materially affect CDS settlement amounts and payouts. Prior Restructuring credit events had always settled on the basis of the new (post-restructuring) debt and therefore did not provide protection against the loss incurred on the restructured debt itself. 

This, in turn, required consideration of whether the SUNs, which were equitized in the restructuring, had an Outstanding Principal Balance (OPB) as of the relevant date (i.e., before they were “actually” equitized, but on a date by which the DC had determined the equitization was in principle foreordained). Sections 3.8(ii) & 3.11(b) of the ISDA Definitions direct that OPB will be calculated by, among other things, “subtracting all or any portion of such amount which, pursuant to the terms of the obligation . . . may otherwise be reduced as a result of the effluxion of time or the occurrence or non-occurrence of an event or circumstance,” excepting specified permitted contingencies (i.e., reductions as a result of the application of certain provisions in the obligation or that are “within the control of the holders of the obligation or a third party acting on their behalf (such as an agent or trustee) in exercising their rights under or in respect of such obligation,” such as the existence of a collective action clause). 

That raised questions about whether the Panel’s decision foreclosed a finding of any OPB. Two arguments supported that view. First, a non-permitted contingency arguably existed because the Panel decision demonstrated that the principal balance of the SUNs “could be reduced to 0 ‘pursuant to the terms of’ the collective action clauses in the existing indenture, which were used to effectuate an equitization transaction to which all holders were bound.” Second, it was argued that the “effect of the Panel’s decision is that ‘terms of the obligation’ must include the Restructuring agreement arising out of the TSA and the pre-agreed consent solicitations because,” as the Panel held, “all noteholders were bound by this agreement.”^[38] 

Over such objections, however, the DC concluded that the SUNs had OPB. While acknowledging that the Panel found an agreement sufficient to bind all holders, the DC said that “the wording of Section 3.8 (Outstanding Principal Balance) of the 2014 Definitions and Section 4.7 (Restructuring) of the 2014 Definitions is different, serves a different purpose within the 2014 Definitions and may have different meanings.”^[39] The DC further stated that the relevant question was what amounts could be reduced “pursuant to the terms of the obligation” as of October 7, 2025. And because the formal consent process was still ongoing at the time—and because the facts the Panel relied upon, such as the existence of the TSA, were “external to the terms” of the SUNs—the DC concluded that “the terms of the obligations alone did not include the relevant events and circumstances that may give rise to a contingency for the purposes of Section 3.8(a)(ii) of the 2014 Definitions.” As a result, the DC determined that the SUNs had an OPB and therefore qualified as Deliverable Obligations. 

But this raised yet another issue: The SUNs no longer existed at the time of the CDS auction. To address this, the DC modified the Auction Settlement Terms to include them on the Final List of Deliverable Obligations that qualified for delivery at settlement. Under Rule 3.2(d), the DC may amend the auction settlement terms to “avoid or mitigate against” prejudice that might be caused by the fact that the Auction Settlement Terms and Final List “are not broadly reflective of the Deliverable Obligations and ability to settle which would have been available if Physical Settlement had been the applicable Settlement Method.” That can occur where, for example, obligations that could have been used for physical settlement no longer exist because they were converted into different assets after the credit event but prior to the auction. In prior determinations, such as Steinhoff Europe and Portugal Telecom, the DC invoked this rule to permit delivery of exchanged assets in the same proportions as the original obligations.^[40]

Because the SUNs could have been physically settled on or around October 7, 2025 but were equitized prior to the auction, the DC applied Rule 3.2(d) to permit the delivery of that equity in lieu of delivery of the SUNs at auction.^[41] The DC further explained, “Whilst the presence of the Transaction Support Agreement would have potentially affected the ability of some market participants to settle, it would have been possible for others to settle physically if either (i) the Buyer held or was able to obtain SUNs that were not subject to the Transaction Support Agreement or (ii) the relevant Seller was already subject to the Transaction Support Agreement.”^[42] Consistent with prior DC determinations, the equity was deliverable in proportion to the SUNs outstanding.

At least in the European CDS market, the Ardagh decision has recalibrated market expectations by demonstrating that a Restructuring credit event can be triggered much earlier than the market had previously understood or experienced. Even a transaction support agreement whose implementation remains subject to material conditions could, in combination with the existence of a collective-action clause (CAC), be deemed binding on all holders and trigger a Restructuring credit event, as long as the agreement is disclosed by the company (or otherwise made publicly available), has support from sufficient holders to trigger the CAC, and has a set path to execution (such as a launch of consent solicitations). 

When combined with the DC determinations on OPB and the ability of market participants to deliver assets received in a debt exchange, this interpretation effectively permits what amounts to so-called “asset-package delivery,” which allows the settlement of a CDS to be based on the assets received by a holder of the relevant obligation in a restructuring. However, as previously discussed, this result sits in tension with the deliberate policy choices made in the drafting of the 2014 Definitions. Though the 2014 Definitions included provisions for asset-package delivery with respect to sovereigns and financial institutions, standard corporate CDS were excluded from this regime in part due to concerns that a holder of debt who also holds CDS buy positions might be able to “influence a reference entity’s restructuring decision” such that some debt would be exchanged for an asset package deliberately designed to have a lower value—which, if deliverable at auction, would result in higher CDS payouts.^[43] The outcome of the Ardagh process now introduces that risk without any safeguards or deliberate framework and potentially creates a road map for European CDS protection buyers with influence over the restructuring process to engineer substandard asset packages to increase their payout on the contract. 

Moreover, the Ardagh determination process also injects uncertainty into the European CDS determinations process more generally, leaving open critical questions about how analogous restructurings will be evaluated going forward.

First, the interpretation is not technically binding or authoritative on any future determinations—nothing requires the DC to follow the Panel’s decision in the future. The DC Rules do not say what precedential value (if any) an external panel decision holds; the external panel is simply asked to choose the “better position” on the question presented. And past DC decisions suggest that external panel decisions are not necessarily treated as precedential in practice. For example, a prior meeting statement of the Americas DC relating to Avon Products reflected disagreement between members regarding the precedential value of a prior external panel decision (Sears): While certain DC members thought the statements from that decision “should serve as a guidepost for the Americas DC members in their consideration” of the determinations, “others did not agree with approaching the Sears ER Decision as relevant or binding precedent.”^[44] 

But even assuming the DC will adopt the Panel’s interpretation going forward where the facts are substantially similar, its application to other fact patterns remains uncertain. For example, the Panel distinguished between conditions precedent to the implementation of the agreement, which do not preclude the triggering of a Restructuring, and conditions precedent to the formation of the agreement, which would be a barrier to finding a Restructuring had occurred. Thus, even in a world where precedents are considered, minor variations in how an agreement is structured or worded could lead to an entirely different result. 

In addition, the outcome in a given case may also be highly dependent on what preliminary information about the transaction is publicly released and when. In Ardagh, for example, the existence and terms of the TSA were critical to the Panel’s determination. Had the TSA not been disclosed, the DC (or Panel) would presumably have been much more reluctant to determine that a Restructuring credit event had occurred solely on the basis of the company’s other disclosures. This creates opportunities for gamesmanship and may also reduce transparency if certain stakeholders push to withhold information not otherwise required to be disclosed in order to avoid the triggering of a European CDS.

All this uncertainty hurts the product and the European CDS market as a whole.

Finally, and importantly, the extended nature of the Ardagh determination highlights the need for a more efficient process. The resolution took months: All told, there were more than 50 DC meetings across nine requests, an external review, and a deliverable obligation challenge—and there would have been another external review if even one additional DC member had taken the view that the SUNs had no OPB.  The numerous meetings and discussions we have had with market participants at all levels have indicated a desire to find drafting and process fixes for these issues.

The Ardagh determination exposes gaps between how the 2014 Definitions were intended to work and the realities of modern corporate restructuring transactions, suggesting a need for targeted product reform. 

To resolve these concerns, we see a need for specific and tailored revisions to the Definitions as well as the DC Rules that, taken together, would permit asset-package delivery on European CDS for a limited subset of events, but—critically—with clear rules to prevent moral hazard. Permitting asset-package delivery would reduce (though not entirely eliminate)^[45] the significance of when a Restructuring credit event occurs, as it would eliminate the possibility that an obligation is extinguished in the restructuring and therefore not deliverable at auction, causing European CDS to settle at higher prices than they would have based on an earlier trigger—either the obligation will be deliverable (if it still exists) or the asset package will be (if the obligation is no longer outstanding). 

This would also reduce the opportunities for gamesmanship based on the strategic release (or withholding) of public information designed to trigger (or to avoid triggering) European CDS. In the case of Ardagh, it would have been very difficult for the DC to determine that a credit event had occurred if the TSA had not been publicly released by the company and available to the DC. In the future, European CDS protection sellers that also hold debt instruments would have an incentive to make that information fully confidential (to the extent permitted by law), preventing it from being used by the DC. 

Importantly, permitting the use of asset-package delivery would enable market participants to capture the discount at which the debt is converted in all instances where a Restructuring credit event takes place, regardless of when the credit event is triggered. Many market participants have indicated they would welcome that approach as consistent with the intended behavior of CDS contracts. In fact, many participants mistakenly assume that is already the way CDS contracts currently behave. 

Explicit recognition of asset-package delivery would also allow for the design of a principled (albeit likely still subjective) framework to guard against abuse. For example, asset-package delivery could be conditioned on a determination by the DC as to whether the debt-for-asset exchange in the restructuring transaction in question appears to be the product of a good-faith, commercially reasonable process. In making that determination, the DC might be directed to consider factors such as whether there were multiple series of otherwise pari passu debt receiving materially diverging treatment in terms of value without an objectively reasonable rationale, whether the debt was held or otherwise controlled by a single entity (or its affiliate) or group, or how the value of the asset package compared to the pre-restructured debt (which could be based on objective market valuations), among other considerations. 

ISDA’s 2019 amendments to address narrowly tailored Credit Events—codified in its Narrowly Tailored Credit Event (NTCE) Supplement—provide a useful precedent.^[46] ISDA adopted these amendments to address concerns that CDS market participants were entering into arrangements with companies that were “narrowly tailored to trigger a credit event for CDS contracts while minimizing the impact on the corporation, in order to increase payment to the buyers of CDS protection.”^[47] The Narrowly Tailored Credit Event Supplement addressed this by permitting contractual parties to impose a “Credit Deterioration Requirement,” providing that a Failure to Pay does not occur “if such failure does not directly or indirectly either result from, or result in, a deterioration in the creditworthiness or financial condition of the Reference Entity.” Critically for the present proposal, it also contains “interpretive guidance” designed to “assist in the determination of whether an event constitutes a Failure to Pay,” which includes a list of non-exclusive factors that might be relevant in making that determination (e.g., whether the failure to pay was deliberately engineered to trigger a CDS and whether the Reference Entity otherwise had sufficient liquidity to meet its obligations as they came due). A similar, principles-based framework could be adopted to address the moral hazard concerns associated with asset-package delivery.

Another approach to the uncertainty generated by the Ardagh decision would be to codify the outcome of the decision directly. This could be accomplished by expanding the Definitions to specifically cover transaction support agreements providing for a debt-for-equity exchange once supported by sufficient holders to meet the requisite holders thresholds in the debt documents, and regardless of conditionality, so long as the Reference Entity initiates implementation (such as by launching consent solicitations). The issue with that approach, however, is that it would still allow outcomes to turn on timing and technicalities and would not always solve the issue of the settlement process failing to capture the conversion discount. In addition, it could have disturbing results, such as a Restructuring credit event where the reference entity would later change course and abandon its previously disclosed plans. In our view, the addition of a new asset-package delivery mechanism therefore offers a more complete solution. 

Some have argued that amending the contract would risk splitting already thin liquidity in the market for high-yield European CDS if only some market participants (presumably those with predominantly buy-protection positions who are more likely to benefit from the changes) are in favor but others are not. That said, the alternative is much worse: the potential obsolescence of CDS contracts generated by a perception that the contract no longer delivers on the fundamental economics. Also, as with any other amendment to the product, certain “hot” credits that would experience a significant price change because of the migration could be carved out from any protocol effectuating the relevant changes. That was incidentally the case in the context of the NTCE revisions discussed above, and did not create much, if any, issue. 

Recent discussions of ISDA’s Credit Derivatives Governance Committee (the Governance Committee) indicate momentum toward a framework for expanding asset-package delivery. At an April 27, 2026 meeting, the Governance Committee discussed a “proposal to mandate development asset-package delivery in connection with restructuring credit events for European corporate CDS, initially focused on high-yield names, but with potential extension to all European corporates.”^[48] According to meeting minutes, a committee member explained that the “existing framework involves substantial complexity and uncertainty” and the proposal “is intended to reduce reliance on technical distinctions around timing of triggers and to align CDS settlement more directly with the market’s expectation of settlement outcomes by permitting delivery of the full package of instruments resulting from a restructuring.” Id. Again, this would respond to a need expressed by many buy-side market participants because it would allow them to capture the discount imposed on the value of restructured debt. The Governance Committee “generally supported further development of the proposal.” Id. 

We have been advocating for this approach for some time and believe that its adoption—following due consultations with market participants and via a transaction-type amendment and a limited-purpose protocol (such as the NTCE revisions discussed above)—would improve the overall functionality of CDS and their relevance to market participants.

Besides the main topics discussed in this article, other improvements could be made to the product, both in terms of governance and in terms of substantive changes to the Definitions to address certain issues identified over the years.  A fair amount of progress has been made on the governance front, most recently with the selection of S&P Global as the administrator for the Credit Derivatives Determinations Committees, but some work remains in order to fully implement the findings of the ISDA consultation on proposed changes to the determinations committees in 2024, with the hope that implemented changes will enhance process and determinations transparency as well as the efficiency of the process.  More broadly, the evolution of debt markets in the last decade or so calls for adjustments to be made to the Definitions.  While asset-package delivery for certain corporate CDS contracts would resolve one issue, other issues, such as orphan CDS risk resulting from refinancings in (again) European high-yield CDS, should be addressed.  It has been 12 years since the 2014 Definitions were finalized; the time has come to start working on an update, especially considering the amount of time it takes to finalize a revised set of definitions.  Stay tuned…

[1] The “Definitions” or “2014 Definitions.”

[2] https://perma.cc/QG9E-58LF.

[3] https://perma.cc/T884-LQMB. The EMEA DC also determined that a Bankruptcy credit event had not occurred. 

[4] The DC unanimously agreed that a Restructuring credit event occurred no later than November 12, 2025, following Ardagh’s announcement that it had successfully completed the recapitalization transaction. However, that was without prejudice to its resolution of the earlier requests, and the DC did not decide at that time the date on which the credit event occurred. November 19, 2025, DC Meeting Statement, https://perma.cc/ZMC9-MG4X.

[5] See Ardagh Group S.A. Announcement of Consent Solicitation Results and Partial Re-Opening of Consent Solicitations (Oct. 28, 2025), https://perma.cc/C742-3VHK.

[6] Ardagh Group S.A. Announces Comprehensive Recapitalization Transaction (July 28, 2025), https://perma.cc/M8PB-KCP5.

[7] August 8, 2025, Determinations Committee Decision, https://perma.cc/8XV3-DPZS.

[8] Ardagh Group Transaction Support Agreement—Accession Update (Aug. 8, 2025), https://perma.cc/B4N3-S4RK.

[9] August 14, 2025, Determinations Committee Decision, https://perma.cc/X6EN-7F93.

[10] Ardagh Group Update on Transaction Support Agreement Accessions (Aug. 13, 2025), https://perma.cc/F9TM-88QZ.

[11] Ardagh announces launch of consent solicitations to amend its existing indentures and mandatorily transfer certain of its existing notes in consideration for new securities (Sept. 29, 2025), https://perma.cc/TWV6-MT9N.

[12] October 21, 2025, Determinations Committee Decision, https://perma.cc/MG7S-64BK.

[13] November 7, 2025, Determinations Committee Decision, https://perma.cc/88CS-XQSL & November 19, 2025, Determinations Committee Decision, https://perma.cc/TFF2-LWZB.

[14] Ardagh announces Effective Time in respect of Consent Solicitations, https://perma.cc/K2TH-63JE.

[15] November 7, 2025, Determinations Committee Decision, https://perma.cc/88CS-XQSL.

[16] November 19, 2025, Determinations Committee Decision, https://perma.cc/TFF2-LWZB.

[18] November 7, 2025, Determinations Committee Decision, https://perma.cc/88CS-XQSL.

[17] Announcement of Consent Solicitation Results and Partial Re-Opening of Consent Solicitations, https://perma.cc/A5L6-WEED.

[19] November 19, 2025, Determinations Committee Decision, https://perma.cc/24AD-EW3H.

[20] Announcement of Consent Solicitation Results (Nov. 4, 2025), https://perma.cc/4NUH-7HVV.

[21] This announcement also triggered a request relating to whether the SUNs would be a Deliverable Obligation, to the extent any of these events were resolved to be a Restructuring Credit Event. See https://perma.cc/LR6R-PRRY.

[22] November 7, 2025, Determinations Committee Decision, https://perma.cc/88CS-XQSL.

[23] November 19, 2025, Determinations Committee Decision, https://perma.cc/TFF2-LWZB.

[24] Ardagh Announces Amicable Agreement and Settlement Date (Nov. 12, 2025), https://perma.cc/M2JJ-49EK & Ardagh Successfully Completes Comprehensive Recapitalization Transaction (Nov. 12, 2025), https://perma.cc/EP4N-VWZY.

[25] November 19, 2025, Determinations Committee Decision, https://perma.cc/TFF2-LWZB.

[26] November 19, 2025, DC Meeting Statement, https://perma.cc/B6SZ-YRLC.

[27] See Credit Derivatives Determinations Committees Rules (the Rules), Section 4, https://perma.cc/8GE8-7NS7.

[28] See Rules, Section 4.6(g) (“The Convened DC shall be deemed to ratify the Final Decision, without any amendment or further action, at the time such Final Decision is published and such Final Decision will constitute a DC Resolution for purposes of the Rules.”).

[29] See Rules, Section 4.5.

[30] See Rules, Section 4.6.

[31] The authors represented a client in connection with these CDS Determinations Committee proceedings, including filing an amicus brief on behalf of the client during the external review process and representing a challenge to the Outstanding Principal Balance determination. This article is based on publicly available information.

[32] See December 15, 2025, Decision of External Review Panel of the Determinations Committee of the International Swaps and Derivatives Association, Inc., https://perma.cc/23F8-LKWR.

[33] Decision, ¶ 11. 

[34] Decision, ¶¶ 12 & 15.

[35] Decision, ¶ 18.

[36] Decision, ¶ 25.

[37] Decision, ¶ 24(b).

[38] Challenge submitted by Arini Capital Management, https://perma.cc/GZ2X-WWEE.

[39] DC Statement—12 January 2026, https://perma.cc/4KYD-2XDS.

[40] In the case of Steinhoff, for example, the DC explained that it would have been “unfair” if there were Deliverable Obligations that could have been used had the CDS trade immediately been physically settled, but that had disappeared by the time of auction settlement, and that the substitute package of assets “reflects the cash-market position of a holder of the Notes immediately following the reconstitution and, therefore, the package of assets that a protection seller would at such time have received had delivery of the Notes been effected under the usual physical settlement timeline.” See 2019 Steinhoff Europe AG Credit Derivatives Auction Settlement Terms Explanatory statement (September 13, 2019), ¶¶ 3.3 & 4.1, https://perma.cc/J79G-HYC6.

[41] DC Meeting Statement—30 January 2026, https://perma.cc/9AA4-WAWV.

[42] DC Meeting Statement—24 February 2026, https://perma.cc/5LZC-N2LC.

[43] Indra Rajaratnam, Credit Default Swaps: The Vanilla Essence (Risk Books, 2022).

[44] Credit Derivatives Determinations Committee for the Americas, October 1, 2024, Meeting Statement regarding Avon Products, Inc., https://perma.cc/VZP8-35MU.

[45] To be sure, timing still matters for parties that have expiring CDS. But this is fully in the control of CDS traders, who can control the maturity date of their contracts. 

[46] 2019 Narrowly Tailored Credit Event Supplement to the 2014 ISDA Credit Derivatives Definitions (July 15, 2019), https://perma.cc/6JFE-D7S8.

[47] Interpretive Guidance, ¶ 1.2, https://perma.cc/RDP7-22DB (quoting ISDA Board of Directors’ April 2018 statement).

[48] April 27, 2026, Credit Derivatives Governance Committee (Committee) Minutes, https://perma.cc/2TKJ-SBPD.