fails to enforce within a reasonable time of instruction. No-action clauses can be seen as a contractual variant of Vanderpitte procedure( a beneficiary can force a party to bring an action by bringing an action against the trustee). A bond trustee is obliged to enforce if; event of default certification of material prejudice instruction from bond holders; and satisfactory indemnity SYNDICATED; Security trustees within these situations are obliged to enforce upon an event of default AND majority instructions. Individual action by a lender is possible because their rights are several and not joint. However, they do not have the benefit of security as it is vested in the strictly trustee. The result is that the realisation of the security to pay off the called debt (if not all parties are calling the debt) is shared severally pro rata. This discourages parties from realising the debt. This is found within a ‘pro-rata sharing clause’ by forcing individual lenders to share individual recoveries which reduces incentive to cut-the-line behaviour. Tragedy of the anti-commons As we have outlined above, veto-rights of individual bond holders/lenders can lead to sub-optimal outcomes. For example, a proper restructuring benefitting everyone is blocked. A solution to this problem is restrictions on agreements based on majorities. Majority can bind a minority, with the exception of some ‘all lenders matters’. In case of loans, majority lenders typically defined as 50% or 75% of value based on commitments. Non-consenting banks can sometimes be forced to transfer. This was observed in the Yank-the-bank clause outlined above. Minority oppression & Prisoners dilemma Majority might oppress minority bond holders/lenders. Coordination problems lead to lenders to prefer sub-optimal options, because it is the safest option but not necessarily the best. Two forms of protections exist to prevent minority oppression. Several concepts have been outlined above and below, but it will be useful to be summarised here in order to appreciate the two primary methods of lenders within minority positions. Transfer: Minority lenders who feel oppressed may choose to transfer their debts to other, although conflict might limit amount of willing buyers to reduce price of the loan/bonds Implied term: It is an implied term in loan and bond agreements that the majority must act in good faith and for the purpose of benefiting the class as a whole. Subject to the express terms of contract. Where there are different classes, there is no need to