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.

In the context of joint liquidators’ applications for documents “belonging to” the company or “relating to” its affairs (under sections 324 and 326 of the Insolvency Act 1986), the High Court confirmed that English law applied to determine whether documents could be withheld by the Luxembourg lawyers who were respondents to the application.

The Court of Appeal has held that a settlement agreement, in which the defendant acknowledged that a debt was payable in full and agreed the mechanics and timing of payments, had the effect of excluding the defendant’s right of equitable set-off: IG Index Ltd v Ehrentreu [2013] EWCA Civ 95. The claimant was therefore entitled to summary judgment on the debt. The defendant however remained free to pursue his cross-claim for damages against the claimant.

The government has clarified which claims will benefit from the continued recoverability of CFA success fees and ATE insurance premiums, following its announcement in May last year that there would be a two-year delay to implementation of this aspect of the Jackson reforms for “insolvency proceedings” (see post).