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SEQUANA: UK Supreme Court Explanation of the “Creditor Duty”

Introduction

Today, the UK Supreme Court considered for the first time the existence, content and engagement of the so-called “creditor duty”: the alleged duty of a company’s directors to consider, or to act in accordance with, the interests of the company’s creditors when the company becomes insolvent, or when it approaches, or is at real risk of, insolvency.

United Kingdom, Company & Commercial, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Insolvency, UK Supreme Court
UK High Court judgment on ISDA Default Rate calculations in Lehman Waterfall IIC, and supplemental judgment on statutory interest and currency conversion claims in Waterfall IIA and IIB

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.

United Kingdom, Banking, Derivatives, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, International Swaps and Derivatives Association, Lehman Brothers