J P Morgan Chase Bank N.A. v Australia and New Zealand Banking Group Limited [2011] NSWSC 1359

J P Morgan Chase Bank N.A. v Australia and New Zealand Banking Group Limited [2011] NSWSC 1359

Any instruction by the Senior Financiers under clause 3.5(e) of the intercreditor deed requiring Bond Financiers to vote in favour of the hybrid schemes would unfairly compromise their rights in a manner beyond what the deed contemplates, as obedience to such instruction extinguishes fundamental contractual and statutory rights unrelated to maintaining the agreed subordination regime.

Parties
Plaintiff: J P Morgan Chase Bank NA; First Defendant: Australia and New Zealand Banking Group Limited; Second Defendants: ADM Galleus Fund I Limited and other signing senior lenders listed in the schedule to Commercial List Response filed 3 November 2011
Jurisdiction
Australia
Judgment Date
11 November 2011
Procedural Posture
Commercial List Equity Division / Principal Judgment
Outcome
Declaratory relief granted and costs order against second defendants
Legal Topics
Construction and Interpretation of Contracts, Subordination, Voting Rights, Schemes of Arrangement
Contracts Banking and Finance Construction and Interpretation of Contracts Subordination Voting Rights Schemes of Arrangement

Case Brief

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Parties

J P Morgan Chase Bank NA

Plaintiff

Australia and New Zealand Banking Group Limited

First Defendant

ADM Galleus Fund I Limited and other signing senior lenders listed in the schedule to Commercial List Response filed 3 November 2011

Second Defendants

Procedural Posture

Commercial List Equity Division / Principal Judgment

Legal Issues

  1. 1 Whether any instruction by the Senior Financiers to the plaintiff to vote in favour of the CNP hybrid lenders schemes of arrangement would unfairly compromise the rights of the plaintiff beyond what is contemplated by the intercreditor deed
  2. 2 Whether the plaintiff can vote against the proposed hybrid schemes without obtaining prior written consent of the Senior Representative

Ratio Decidendi

Any instruction by the Senior Financiers under clause 3.5(e) of the intercreditor deed requiring Bond Financiers to vote in favour of the hybrid schemes would unfairly compromise their rights in a manner beyond what the deed contemplates, as obedience to such instruction extinguishes fundamental contractual and statutory rights unrelated to maintaining the agreed subordination regime.

Court Disposition

Declaratory relief granted and costs order against second defendants

Orders

  • Declare that any instruction by the Senior Financiers to the plaintiff to vote in favour of the CNP hybrid lenders schemes is an instruction that would unfairly compromise the plaintiff’s rights beyond what the deed contemplates.
  • Declare that the plaintiff is entitled to vote against the proposed hybrid schemes without obtaining prior written consent of each Senior Representative.