![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales High Court (Commercial Court) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Gemini (Eclipse 2006-3) Plc & Anor v Danske Bank AS & Anor [2012] EWHC 3103 (Comm) (05 November 2012) URL: https://www.bailii.org/ew/cases/EWHC/Comm/2012/3103.html Cite as: [2012] EWHC 3103 (Comm) |
[New search] [View without highlighting] [Printable RTF version] [Help]
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Strand, London, WC2A 2LL |
||
B e f o r e :
____________________
(1) GEMINI (ECLIPSE 2006-3) PLC (2) THE BANK OF NEW YORK MELLON |
Claimants |
|
- and - |
||
(1) DANSKE BANK A/S (2) BNY MELLON CORPORATE TRUSTEE SERVICES LIMITED |
Defendants |
____________________
Richard Salter QC and Sophie Mallinckrodt (instructed by Field Fisher Waterhouse) for the Defendants
Hearing date: 29TH OCTOBER 2012
____________________
Crown Copyright ©
Mr Justice Cooke:
Introduction
The Securitisation
The Liquidity Facility
a) make up shortfalls of interest received on the underlying Loan, such drawings being referred to as Loan Income Deficiency Drawings;
b) pay certain amounts that can be applied and/or which are due to third party unsecured creditors of the Issuer (not the Noteholders or the Liquidity Facility Provider), such drawings being referred to as Revenue Priority Amount Drawings; and
c) pay certain amounts to be paid and/or due to certain secured creditors of the Issuer, such drawings being referred to as Expenses Drawings.
In addition, the Liquidity Facility may also (subject to certain conditions) be used to fund payments of certain amounts due from the borrowers which, if not paid, may result in, for example: (a) a reduction in value of the property asset(s) on which the Loan is secured; or (b) a payment default under a hedging arrangement entered into by a borrower. Such drawings are referred to as Loan Protection Drawings.
The Loan default; but no acceleration under the Loan or the Notes
Liquidity Facility Increased Costs
Non-subordinated part of the July Increased Costs
Dispute in relation to the remainder of the July Increased Costs
Interim Agreement
Issues on which the parties are in agreement
a) the amounts claimed by the Liquidity Facility Provider in relation to the 25 July 2012 Interest Payment Date constitute Liquidity Facility Increased Costs;
b) the Non-Subordinated Liquidity Facility Amount was due and payable to the Liquidity Facility Provider on 25 July 2012 (under sub-paragraph (e) of the Pre-Acceleration Revenue Priority of Payments set out in the Cash Management Agreement) and was duly paid;
c) on the facts there was no need for the Issuer or Cash Manager to make any Expenses Drawing under the Liquidity Facility Agreement in order to fund the Non-Subordinated Liquidity Facility Amount on the 25 July 2012 Interest Payment Date;
d) the remainder of the Liquidity Facility Increased Costs (comprising £1,894,794.52 in relation to the 25 July 2012 Interest Payment Date) constitute Liquidity Subordinated Amounts; and
e) to the extent that July Liquidity Subordinated Amounts were due and/or payable on 25 July 2012, they were only payable in accordance with the Pre-Acceleration Revenue Priority of Payments under which interest owing to Noteholders is to be paid in priority to any Liquidity Subordinated Amounts (which fall at sub-paragraph (m) in the Pre-Acceleration Revenue Priority of Payments).
Issues on which the parties are not in agreement
a) whether the July Liquidity Subordinated Amounts were due and/or payable on 25 July 2012; and
b) whether an Expenses Drawing was required to be made under the Liquidity Facility Agreement and the Cash Management Agreement in respect of those amounts.
Principles of Construction
The LFA
(23)(a) "The Liquidity Facility Provider acknowledges to the Issuer and the Trustee that it is bound by the terms of the Issuer Deed of Charge and agrees that, notwithstanding any other provision of this Agreement, the Liquidity Subordinated Amounts and all other amounts due to it in accordance with the terms of this Agreement will only be due and payable if and to the extent that the Issuer has funds available to be applied in accordance with the Cash Management Agreement and the Issuer Deed of Charge in or towards payment of the Liquidity Subordinated Amounts and all other amounts due to it in accordance with the terms of this Agreement after all amounts required to be paid in priority thereto under the Cash Management Agreement and the Issuer Deed of Charge have been discharged or paid in full."
(23)(b) "Interest shall accrue on the amount of any Liquidity Subordinated Amounts otherwise due and payable but which are not due and payable as a result of the provisions of this Clause 23 (Subordination) at the rate referred to in Clause 9.l(a)(i). Any Liquidity Subordinated Amounts otherwise due and payable but which are not due and payable as a result of this Clause 23 (Subordination), together with accrued interest thereon, shall be treated as Liquidity Subordinated Amounts due and payable, subject to the provisions of this Clause 23 (Subordination), on the next following Interest Payment Date."
"If on any Calculation Date the Cash Manager determines that there is a shortfall in any amounts to be paid by the Issuer pursuant to the terms of the Transaction Documents to the Issuer Secured Creditors (other than the Noteholders), the Cash Manager must prior to a Liquidity Facility Event of Default (and following receipt of notice that any steps have been taken by the Trustee to enforce the Issuer Security, subject to the directions of the Trustee (or any Receiver)) on behalf of the Issuer make an Expenses Drawing on the next following Interest Payment Date in an amount equal to the relevant shortfall by giving to the Liquidity Facility Provider a duly completed Liquidity Facility Request for an Expenses Loan. "
The CMA
a) under clause 6.1 has to maintain a Revenue Ledger in respect of revenue amounts received and paid by the Issuer and a Liquidity Ledger in respect of drawings under the LFA.
b) under clause 6.2 has to:
i) credit the Revenue Ledger with "all Available Issuer Income….. Expenses Drawings [and other Drawings] transferred and credited to the Transaction Account….. and debit the Revenue Ledger with all payments made by or on behalf of the Issuer out of Available Issuer Income, Adjusted Available Issuer Income" or other amounts available.
ii) credit the Liquidity Ledger with any amounts paid to the LFP on an Interest Payment Date and debit the Liquidity Ledger with all drawings under the LFA.
"Prior to the delivery of an Acceleration Notice or the Notes otherwise becoming due and repayable in full and the Trustee taking any steps to enforce the Issuer Security, the Cash Manager (on behalf of the Issuer) will, on each Interest Payment Date, apply Adjusted Available Issuer Income credited to the Revenue Ledger in the following order of priority (in each case only if and to the extent that the payments and provisions of a higher priority have been made in full):"
"on each Interest Payment Date, transfer or procure the transfer and application of the Adjusted Available Issuer Income amount standing to the credit of the Transaction Account and credited to the Revenue Ledger, at the times and in accordance with Schedule 1 (Pre-Acceleration Revenue Priority of Payments) (in each case only if and to the extent that the payments and provisions of a higher priority have been made in full)."
"In the event that there is a shortfall in the amount available to the Issuer on any Calculation Date to pay amounts due to the Issuer Secured Creditors (other than the Noteholders) on the next following Interest Payment Date, the Cash Manager will prior to a Liquidity Facility Event of Default make an Expenses Drawing under the Liquidity Facility Agreement in an amount equal to such shortfall subject to the availability of the Liquidity Facility in accordance with the terms of the Liquidity Facility Agreement and procure that the proceeds of the Expenses Drawing will be credited to the Transaction Account."
The Issuer Deed of Charge
"(a)Each of the Issuer Secured Creditors hereby agrees to be bound by the order of priority referred to, or set out, in the relevant Priority of Payments. Without prejudice to Clause 20 (Exercise of Certain Rights), each of the Issuer Secured Creditors (other than the Trustee) further agrees with each other party to this Deed that, notwithstanding any other provision contained herein or in any other Transaction Document:
(i) it will not demand or receive payment of any distribution in respect of, or on account of, any amounts payable by the Issuer or the Trustee (as applicable) to that Issuer Secured Creditor under the Transaction Documents, in cash or in kind, and will not apply any money or assets in discharge of any such amounts payable to it (whether by set-off counterclaim or by any other method or means), unless all amounts then due and payable by the Issuer to all other Issuer Secured Creditors ranking higher in the order of priority referred to, or set out, in the relevant Priority of Payments have been paid in full; and
(ii) without prejudice to the foregoing, whether in the liquidation of the Issuer or any other party to the Transaction Documents or otherwise, if any payment or distribution (or the proceeds of any enforcement of any security) is received by an Issuer Secured Creditor in respect of any amount payable by the Issuer or the Trustee (as applicable) to that Issuer Secured Creditor under the relevant Transaction Document at a time when, by virtue of the provisions of the relevant Transaction Document and this Deed, no payment or distribution should have been made, the amount so received shall be held by the Issuer Secured Creditor upon trust for the Trustee and shall be paid over to the Trustee or as it shall direct forthwith upon receipt (whereupon the relevant payment or distribution shall be deemed not to have been made or received). …"
"Each of the Issuer Secured Creditors agrees with the Issuer and the Trustee to be bound by the terms of this Deed insofar as applicable to their rights, claims and remedies and, in particular, confirms that, notwithstanding the provisions of any Transaction Document, no sum (whether of principal, interest, fees, costs and expenses or otherwise or any other amount due or payable to any Issuer Secured Creditor pursuant to the Transaction Documents and whether on, before or after the service of an Acceleration Notice or the Notes otherwise becoming due and repayable in full) shall be paid by the Issuer to it except in accordance with the provisions of Clause 5 (Payments out of the Issuer Accounts and Application of Cash Prior to Acceleration), Clause 6 (Payments out of the Issuer Accounts and Application of Cash Following Enforcement of the Issuer Security but prior to Service of an Acceleration Notice) or Clause 7 (Payments out of the Issuer Accounts and Application of Cash upon Acceleration), as applicable, of this Deed, unless and until all sums thereby required to be paid or provided for in priority thereto have been paid or discharged or provided for in full."
The Combined Effect of the LFA, the CMA and the Issuer Deed of Charge.
"Each Expenses Loan may be used only to make payments to the Issuer equal to any shortfall in any amounts to be paid by the Issuer on any Interest Payment Date to the Issuer Secured Creditors (other than Noteholders)."
Conclusion.