Cases & Deals

Cliffs Natural Resources prevails in bondholder class action

Client(s) Cliffs Natural Resources Inc.

Jones Day represented Cliffs Natural Resources Inc. in a class action challenging a voluntary debt exchange offer that Cliffs Natural Resources conducted in early 2016.

Two bondholders filed suit in the wake of recent Southern District decisions expanding the scope of allowable claims under the Trust Indenture Act. The plaintiffs alleged that the exchange offer effectively subordinated their bonds and impaired their value, and that the exchange offer improperly excluded certain bondholders. The court rejected those claims entirely. After concluding that the plaintiffs lacked standing because there was no factual allegation of injury-in-fact (among other things, the market value of the plaintiffs' bonds increased after the exchange offer), the court held that a voluntary, non-coercive exchange offer does not violate the Trust Indenture Act, even if not all bondholders can participate. The court also rejected a number of state-law claims.

Waxman et al v. Cliffs Natural Resources Inc., No. 1:16-cv-01899 (S.D.N.Y.)