This article looks at some of the issues a lender should consider when a borrower or security provider is incorporated or has substantial assets outside England and Wales. The lender needs to know how this will affect its security and remedies, and the possible impact of insolvency procedures in relevant jurisdictions.
- The 1992 ISDA Master Agreement: Court of Appeal provides clarity on payment obligations owed to insolvent counterparties
Lomas v JFB Firth Rixson Inc [2012] EWCA Civ 419
Facts
In 2006, a subsidiary of a Brazilian company issued US$100 million in principal amount of notes, guaranteed by its parent and constituted by a trust deed.
BBA has published a briefing paper setting out its position on the Commission’s proposal for a bank recovery and resolution directive. It suggests that certain powers, such as appointing a Special Manager or requiring a plan for debt restructuring, are more akin to resolution tools and should not be used until the firm has reached its point of non-viability. This also applies to the bail-in tool, which cannot be used as the first or default option.
FSA has made a statement explaining how the bank’s failure to comply with FSA’s liquidity guidelines as they applied to it was critical. It says that while the bank’s downfall was not directly due to the breaches, the breaches happened at a critical period for the financial markets and at a time FSA needed banks to keep it up to date on their liquidity. (Source: FSA Explains Liquidity Importance)
FMLC has published an addendum to its March 2012 paper on legal uncertainties arising from bail-ins. The addendum addresses the points the Commission made in a recent paper. (Source: FMLC Bail-in Addendum)
In Blight v Brewster [2012] EWHC 165 (Ch) the High Court allowed a creditor to enforce his judgment debt against a debtor's pension funds. The court followed a 2011 Privy Council case (Tasarruf Mevduati Sinorta Fonu v Merrill Lynch Bank and Trust Company & ors) in holding that it had jurisdiction to do so under section 37 of the Senior Courts Act 1981. Section 37 provides that the court may appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.
In its recent decision in Lehman Brothers International (Europe) (in administration)1 the Supreme Court resolves the uncertainty where a regulated firm does not properly segregate client monies. The decision has a number of practical implications, not only for the administration of Lehman Brothers International (Europe) (LBIE) but also for the way client monies are held by institutions.
Background
London - On 29 February 2012, the UK Supreme Court handed down judgment in the much publicised ‘Lehman client money’ case1, ruling in favour of those clients of Lehman Brothers International (Europe) (“LBIE”) whose money ought to have been, but never was, segregated from other assets held by LBIE.
Introduction