So there's currently an interesting case going on with Caesar's bonds because someone accidentally put "and" in a contract where they meant "or".[1] If you have to spend lots of time having a group of expert lawyers and grammaticians going through your contracts before you sign them and checking for every possible edge case, that's a significant inefficiency and cost in the system as well.
The 2001 restructuring was reasonable; most of the bondholders agreed with it, and got a fair price for their bonds. The holdouts knew this when they bought the same bonds.
Imagine a court system that applies common sense and equitable principles and tries to interpret contracts in a way that's as fair as possible to everyone involved, rather than going by the strict letter of every contract document. This removes the ability to rip someone off when you spot a hole in their contract, which makes some things less efficient, but I can see it working better overall.
[1] So it's something like: there's a provision in the contract that says that certain guarantees are invalidated if this subsidiary is reabsorbed into its parent corporation and it's sold to a different company, and some other conditions. Which is obviously nonsense because there's no way those things would both happen. But it's also what the contract says.
> a way that's as fair as possible to everyone involved, rather than going by the strict letter of every contract document.
Presumably, this is in place to keep colluding with judges who will interpret your claim "fairly", for a fee, to a minimum, as well as mitigate the hedge against those who defend contract discrepancies with "Well, that's what we meant", when in fact, that was neither what was meant or ever said.
The Halbig decision bears on this matter. There's a law, which is effectively a contract, and the IRS attempted to interpret it how they needed to to make the ACA work. What this means now is, right or wrong, that we have a group of Senators and Representatives who voted on a law to be enacted as it was written, and when that was no longer viable, they simply 'interpreted' the text of the law to mean something new so that it could work.
Ignoring who's right or who is wrong, some additional lawyering up front would have prevented this, but that was not done because it would not have been politically expedient. Contracts are a way of keeping people fair. If the contract is written in a way that isn't fair, then it would be unenforceable regardless of how well it was written, so that 'fairness' is built in to contract law already.
The 2001 restructuring was reasonable; most of the bondholders agreed with it, and got a fair price for their bonds. The holdouts knew this when they bought the same bonds.
Imagine a court system that applies common sense and equitable principles and tries to interpret contracts in a way that's as fair as possible to everyone involved, rather than going by the strict letter of every contract document. This removes the ability to rip someone off when you spot a hole in their contract, which makes some things less efficient, but I can see it working better overall.
[1] So it's something like: there's a provision in the contract that says that certain guarantees are invalidated if this subsidiary is reabsorbed into its parent corporation and it's sold to a different company, and some other conditions. Which is obviously nonsense because there's no way those things would both happen. But it's also what the contract says.