“3.1 This CVA forms part of the winding-up of the Estate in the interest of creditors. 3.2 Given the high degree of uncertainty as to the quantum and timing of further distributions to CVA Creditors, it offers a range of options for creditors to choose from, each of which could reasonably be considered to be in a CVA Creditor’s interests, depending on its cash needs, risk appetite and investment profile.”
“This Proposal contains certain statements and statistics that are or may be forward-looking. The accuracy and completeness of such statements is not warranted or guaranteed. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although the Administrators believe that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove correct. Without limiting the generality of the immediately preceding paragraph, all statements contained in this Proposal in relation to estimated outcomes for creditors are illustrative only and they cannot be relied upon as guidance as to the actual outcomes for creditors.”
“3.7. … the German Authorities may seek to counter-claim on the Company for the WHT relief already paid out to the Company (referred to as the Potential GTA Claw Back Claim). 3.8 The Company’s dispute with the German Authorities is not standalone and forms part of a wider discussion across the financial sector in Germany. In fact, during the course of the Administration, the deductibility of WHT for trades in German shares in close proximity to a scheduled dividend payment (referred to as cum/ex-trades or cum/cum-trades) has become a controversial and publicised topic in Germany, leading to a criminal investigation by the German Authorities into a large number of financial institutions. 3.9 … the complexity of these issues and their high political profile cause the Administrators to believe that they are unlikely to be resolved for some years to come. ….”
“(a) takes effect as if made by the company at the time the creditors decided to approve the voluntary arrangement, and (b) binds every person who in accordance with the rules – (i) was entitled to vote in the qualifying decision procedure by which the creditors’ decision to approve the voluntary arrangement was made, or (ii) would have been so entitled if he had had notice of it, as if he were a party to the voluntary arrangement.” (b) binds every person who in accordance with the rules – (i) was entitled to vote in the qualifying decision procedure by which the creditors’ decision to approve the voluntary arrangement was made, or (ii) would have been so entitled if he had had notice of it, as if he were a party to the voluntary arrangement.”
“When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to ‘what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean’, to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd[2009] AC 1101 , para 14. And it does so by focussing on the meaning of the relevant words, in this case clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions. ...”
“It is true that if the appeal against the rejection of the DB€126M Proof were to be allowed, the “economics” behind the CVA will be dramatically different from those envisaged in the CVA document”
“it is in particular, the Company’s status vis-à-vis the German Tax Authorities which contributes to the large spectrum of potential financial outcomes for the Estate.” (2) Paragraph 3.8 further stated: “The Company’s dispute with the German Authorities is not standalone and forms part of a wider discussion across the financial sector in Germany. In fact, during the course of the Administration, the deductibility of WHT for trades in German shares in close proximity to a scheduled dividend payment (referred to as cum/ex trades or cum/cum trades) has become a controversial and publicised topic in Germany, leading to a criminal investigation by the German Authorities into a large number of financial institutions.”
“At the Nominees, or Administrators’ sole discretion, the Proposal may be withdrawn prior to or at the Creditors’ Meetings should events occur which cause the Nominees or the Administrators to take the view that the Proposal is no longer in the interests of Creditors.”
“even if received, the Administrators have been advised that there is not a basis for such a claim.” (8) In the last paragraph of section 1 the following warning was given: “Participating Creditors, by virtue of their ultimately acquiring the beneficial interest of both Exiting Creditors’ and Stay-In Creditors’ claims that will transfer to the CVA Trust, could benefit additionally from any outcome above 99.75% in respect of the CVA Trust. Equally, in a ‘low’ outcome they are exposed to potentially realising less than their 99.75% investment in acquiring their interests in the CVA Trust. Broadly this would create a leverage effect, substantially increasing the magnitude of the Participating Creditors’ aggregate financial return/loss beyond the range of the estimated “low” and “high” outcomes.”
“... I also disagree very strongly with any suggestion that any of the indicative outcomes, Progress Reports or other documents produced by the Administrators and provided to creditors could ever be taken or relied upon as providing an exhaustive picture of the assets and liabilities (or range of possible outcomes) of the Company’s estate. There is always the risk of ‘unknown unknowns’ (a phrase used often in my industry is “woodwork creditors”). Particularly in the context of a complex insolvency, it would be naive to think that an exhaustive list of a company’s liabilities can be produced prior to the passing of a “hard bar date”.”
“what should reasonable parties be taken to have intended by the use of those words in that agreement, made in those circumstances, in relation to events which they did not in fact foresee.”
“The CVA shall terminate on the earlier of: (c). the date on which the Supervisors determine, in their sole discretion, that there is a material impediment to the implementation of the CVA (or any material part thereof); and (d). the date on which the Supervisors terminate the CVA in accordance with a direction from the Court.”
“..if not this case, what case? If this clause is not engaged by a disputed claim of 126 million, common ground not disclosed to creditors, common ground not priced into the bargain, common ground not listed in the liabilities or taken into account in the estimated outcomes, common ground [if allowed] [my interpolation] dramatically alters the economics of the CVA, what is it directed at?”
“…the purpose of the key provisions of the CVA is to enact a particular economic bargain: if their literal effect were to do something quite different, that would be an impediment to the proper implementation of that bargain.”
“what is the clause getting at?”
“Often there is no obvious or ordinary meaning of the language under consideration. There are competing interpretations to be considered. In choosing between alternatives a court should primarily be guided by the contextual scene in which the stipulation in question appears. And speaking generally commercially minded judges would regard the commercial purpose of the contract as more important than niceties of language. And, in the event of doubt, the working assumption will be that a fair construction best matches the reasonable expectations of the parties.”
“…commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made. Judicial observations such as those of Lord Reid in Wickman Machine Tools Sales Ltd v L Schuler AG[1974] AC 235 , 251 and Lord Diplock in Antaios Cia Naviera SA v Salen Rederierna AB (The Antaios)[1985] AC 191 , 201, quoted by Lord Carnwath at para 110, have to be read and applied bearing that important point in mind.”
“…while commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Experience shows that it is by no means unknown for people to enter into arrangements which are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the function of a court when interpreting an agreement to relieve a party from the consequences of his imprudence or poor advice. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party.”
“A creditor or member of a company in administration may apply to the court claiming that— (a) the administrator is acting or has acted so as unfairly to harm the interests of the applicant (whether alone or in common with some or all other members or creditors), or (b) the administrator proposes to act in a way which would unfairly harm the interests of the applicant (whether alone or in common with some or all other members or creditors).”
“174 The principle in Ex parte James has been described as anomalous but it is a well-established principle providing a means by which the court can control the conduct of its officers. Administrators, liquidators in a compulsory winding-up and trustees in bankruptcy are all officers of the court and subject to this jurisdiction. The case to which the principle owes its name, like a number of cases immediately following it, concerned the retention by a liquidator or trustee in bankruptcy of money paid under a mistake of law. At that time, money paid under a mistake of law was not recoverable, but the court directed that its officer should not stand on his strict legal rights but should return the funds, notwithstanding that the effect was to deprive the creditors of funds which would otherwise be available for distribution among them. The rationale for the principle was that, although irrecoverable at law, the officer of the court could not in all conscience retain the money, given the circumstances in which it had been paid. It would amount to an unjust enrichment of the estate. Although the principle was first developed and exercised in these circumstances, subsequent cases applied it in other circumstances and it cannot now be said to be confined to particular categories of case. 175 The touchstone for the application of the principle has been expressed in different terms over the years. In Ex parte James itself, James LJ said that the trustee: “ought to set an example to the world by paying it [the money paid under a mistake of law] to the person really entitled to it. In my opinion the Court of Bankruptcy ought to be as honest as other people.” 176 In Re Wigzell[1921] 2 KB 835 , Salter J, in a judgment which was strongly endorsed by the Court of Appeal in that and subsequent cases, said that the “jurisdiction should be exercised wherever the enforcement of legal right would, in the opinion of the Court, be contrary to natural justice.”
“The effect of exercising the jurisdiction which these decisions have asserted and defined is to deprive the creditors of money which is divisible among them by law. I feel sure that such a power should not be used unless the result of enforcing the law is such that, in the opinion of the Court, it would be pronounced to be obviously unjust by all rightminded men.” 177 In the same case in the Court of Appeal, Lord Sterndale MR said that the court would not allow its officer to do “something which in its opinion is dishonourable and not high-minded.”
“Stating the matter in very broad terms indeed for the moment, and deliberately using for the purpose “unemotive language”, the rule provides that where it would be unfair for a trustee to take full advantage of his legal rights as such, the court will order him not to do so …” 179 When applying the principle to the facts of the case before him, namely whether the trustee should recover the amount of two cheques paid to a supplier to the bankrupt, he said at p.567: “The question as I feel it ought to be posed is simply: “Is it fair that the trustee should recover the amount of these two cheques from Texaco?””
“Is it fair that the trustee should recover the amount of these two cheques from Texaco?””
“a principle has been developed and applied to the effect that “where it would be unfair” for a trustee in bankruptcy “to take full advantage of his legal rights as such, the court will order him not to do so”, to quote Walton J in In re Clark (a bankrupt), Ex p The Trustee v Texaco Ltd[1975] 1 WLR 559 , 563. The same point was made by Slade LJ in In re TH Knitwear (Wholesale) Ltd[1988] Ch 275 , 287, quoting Salter J in In re Wigzell, Ex p Hart[1921] 2 KB 835 , 845: “where a bankrupt's estate is being administered … under the supervision of a court, that court has a discretionary jurisdiction to disregard legal right”, which “should be exercised wherever the enforcement of legal right would … be contrary to natural justice”
“…in view of the Disputed Claims that we see, it would be unfair to force one group of creditors, the Participating Creditors, to fund£64 million of exit payments, when we know that the disputed claims universe is materially different from that contemplated by and disclosed to the creditors in the Proposal.”