”It seems to me that if they were a bona fide issuance, that it totally narrows what else needs to be discussed,” Judge Isgur said. “On the other hand, if those were not a bona fide issuance for whatever reason, it’d be the end of the case, right?”

Judge Isgur said the question “weighs so heavily” on his mind that he wants to decide if the bonds were issued before hearing closing arguments on any other issues in the case. He told lawyers present that they could confer with their clients and their counterparts before making such a decision, but recommended lawyers avoid submitting lengthy briefs on the subject.

The $250m of additional 2026 notes were issued on 28 March to give Silver Point and Pimco the two-thirds majority needed to amend Incora’s bond indentures; those notes were subsequently exchanged and cancelled. The issuance of those notes allowed for the LME that subordinated other bondholders including JPMorgan and BlackRock. (You can read more on the structure of the transaction here.)

Since then, both of those firms have joined the ad hoc group of 2024/2026 noteholders challenging the transaction in court. Lawyers for that group have labeled the additional notes “phantom notes” and questioned whether the documents are authentic under the terms of the indenture.

That argument hinges on language in the credit documents that require bonds issued feature a “manual” signature. In a motion filed in April, the 2024/2026 group alleged that earlier testimony in the trial from Incora chief financial officer Ray Carney “could not establish either the authenticity or admissibility” of the notes.