Summary: A Supreme Court decision on 29 October 2009 has overturned the previous Court of Appeal ruling in relation to Sigma Finance (in administrative receivership) (Sigma).
Background to Re Permacell
Cryptoassets continue to be in the spotlight with prices no longer heading ‘to the moon’, the recent high-profile failure of an algorithmic stablecoin and the difficulties experienced by various service providers. This all forms the backdrop to the UK Government’s publication of proposals with respect to managing the failure of systemic digital settlement asset firms.
Overview
Summary
The recent judgment of the Supreme Court in the joined cases of Rubin and another v Eurofinance SA and others and New Cap Reinsurance Corporation (in liquidation) and another v A E Grant and others [2012] UKSC 46, issued on 24 October 2012, established that judgments avoiding pre-bankruptcy transactions (“avoidance judgments”) made by non-EU foreign courts (including U.S. bankruptcy courts) have no special enforceability status in England and Wales compared to ordinary judgments.
Last week the Court of Appeal of England and Wales handed down its decision in four appeals which raise a number of questions of construction in relation to derivatives in the form of interest rate swaps and forward freight agreements documented under the International Swaps and Derivatives Association Inc. Master Agreement (the “ISDA Master Agreement”).1 In particular, the decision focuses on the interpretation of section 2(a)(iii) of the ISDA Master Agreement.
Key Points
On 29 February, the Supreme Court of the United Kingdom handed down its judgment on the treatment of client money that had not been segregated, or was improperly segregated, as at the date Lehman Brothers International (Europe) (“LBIE”) entered administration. The Supreme Court found that:
MF Global UK Limited In Special Administration
The Financial Services Authority (“FSA”) has confirmed that MF Global UK Limited (“MF Global UK”) has entered the Special Administration Regime created under the Investment Bank Special Administration Regulations 2011 (“Regulations”).1 MF Global UK is the first investment bank to enter the Special Administration Regime. The decision to apply for special administration was initiated by the board of MF Global UK.
Introduction
The High Court1 in England has confirmed the validity under English law of contractual provisions common in structured finance transactions which subordinate payments to a swap counterparty in circumstances where the swap counterparty has defaulted on its obligations under the terms of the relevant swap agreement.
The Judgment
Parties
Historically, the United Kingdom has not had a specialised bankruptcy regime for dealing with the failures of financial institutions. Rather, these were handled under the same rules that applied to ordinary corporations.