Legal action expenses

While all such enforcement actions may be appealed in the Federal Court, it is usually only the last of these, forced product withdrawal, that justifies the time, expense, and uncertainty of such legal action. Drug products usually remain off the market under temporary injunction while such proceedings take place, and this prolonged period per se is often sufficient to kill the product for economic reasons. The more serious of these enforcement actions is also punishable with prison terms and fines under the Food, Drugs and Cosmetics Act. A large inspectorate is distributed throughout the USA and around the world as part of FDA s enforcement arm. 

Generally, the trustee takes first priority in the post enforcement priority of payments scheme (i.e., the order by which monies in the structure are distributed to the bondholders and other secured creditors). However, the trustee cannot necessarily expect a transaction in default to produce sufficient cash flows to cover the fees, expenses and potential legal liabilities it might incur in dealing with a default scenario. Accordingly, most trustees will be reluctant to take action upon an event of default situation without the explicit mandate of the bondholders. The trustee will not only be looking to the bondholders for indemnification, but also for assurance that the requisite number of bondholders (normally a majority) agrees that acceleration of debt/enforcement of the security is prudent under the circumstances. 

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