So determined is NVR to repurchase its stock that in 2001 and 2002 it paid $7 million in so-called consent fees to get debt holders' permission to buy more shares than its bond covenants allowed.

The bond covenants do not prevent Macy from incurring additional debt, nor do they protect holders against asset sales, reorganization or changes in control of the company.

Another approach would involve writing restrictions into the bond covenants.

He cited a Supreme Court ruling in the late 1970's that included a footnote mentioning this tactic as an option in altering bond covenants.

The bond covenant, now being written, is supposed to restrict borrowing and prevent lawmakers from rolling one year's debt into the next.

The frequent rejoinder is that nothing can be done about this problem because bond covenants would prohibit it.

His reasoning: since Prime was not behind on interest payments to bondholders, the bankruptcy filing did not constitute a default - even though the bond covenants said it did.

To that, Assemblywoman Audrey I. Pheffer replied: "Eliminate the bond covenant.

Trying to Overcome Tradition There are huge obstacles to such fundamental changes, including state laws, municipal bond covenants, Civil Service rules, union contracts, tradition and, of course, politics.

Under Hilton's bond covenants, that would cause an increase in interest rates.