In 7636156 Canada Inc. v. OMERS Realty Corporation1 (“7636156 v. OMERS”), the Ontario Superior Court of Justice (Commercial List) (the “Court”) held that a bankrupt’s landlord was only entitled to have drawn down on a letter of credit by an amount equal to the landlord’s priority claim for three months’ accelerated rent, rather than by the full amount of the letter of credit, and ordered that the landlord pay over the excess to the bankrupt’s trustee.
The High Court in London handed down judgment on Part C of the Lehman Waterfall II Application on 5 October 2016.
The judgment examines the extent of creditors’ entitlements to Default Rate interest on debts arising under ISDA Master Agreements governed by English law and New York law. As some £4.4 billion of LBIE’s admitted claims arise under ISDA Master Agreements and the debts were outstanding for more than five years, this judgment will materially influence the amount of money which must be applied in satisfaction of creditors’ entitlements to statutory interest.