Perpetual Trustee Co Ltd v BNY Corporate Trustee Services Ltd & Anor

Perpetual Trustee Co Ltd v BNY Corporate Trustee Services Ltd & Anor

Clause 5.5 of the Supplemental Trust Deed is valid under English law; Lehman BSF's priority was always conditional and never passed to its insolvent estate free from those limitations. The anti-deprivation principle is not engaged, as the collateral was never Lehman BSF's property and its interest was determinable upon default. The court declined to grant a permanent stay, but adjourned proceedings to allow time for potential requests from the US Bankruptcy Court or foreign representative.

Parties
Claimant: Perpetual Trustee Co. Ltd; Claimant: Belmont Park Investments PTY Ltd & Ors; 1st Defendant: BNY Corporate Trustee Services Ltd; 2nd Defendant: Lehman Brothers Special Financing Inc
Jurisdiction
England and Wales
Judgment Date
28 July 2009
Procedural Posture
Civil / Interlocutory Judgment on Validity of Priority Clause and Stay Application
Outcome
Clause 5.5 is valid under English law; proceedings adjourned for further argument on indemnities and to allow time for potential requests from US Bankruptcy Court.
Legal Topics
Anti Deprivation Principle, Priority of Creditors, Cross Border Insolvency, Interpretation of Trust Deeds, Stay of Proceedings
Insolvency Trusts Contract Anti Deprivation Principle Priority of Creditors Cross Border Insolvency Interpretation of Trust Deeds Stay of Proceedings

Case Brief

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Parties

Perpetual Trustee Co. Ltd

Claimant

Belmont Park Investments PTY Ltd & Ors

Claimant

BNY Corporate Trustee Services Ltd

1st Defendant

Lehman Brothers Special Financing Inc

2nd Defendant

Procedural Posture

Civil / Interlocutory Judgment on Validity of Priority Clause and Stay Application

Legal Issues

  1. 1 Whether clause 5.5 of the Supplemental Trust Deed conferring Noteholder Priority is void under English law by the anti-deprivation principle
  2. 2 Whether the British Eagle principle applies to the priority clause
  3. 3 Whether the court should grant a stay pending US Bankruptcy Court proceedings

Ratio Decidendi

Clause 5.5 of the Supplemental Trust Deed is valid under English law; Lehman BSF's priority was always conditional and never passed to its insolvent estate free from those limitations. The anti-deprivation principle is not engaged, as the collateral was never Lehman BSF's property and its interest was determinable upon default. The court declined to grant a permanent stay, but adjourned proceedings to allow time for potential requests from the US Bankruptcy Court or foreign representative.

Court Disposition

Clause 5.5 is valid under English law; proceedings adjourned for further argument on indemnities and to allow time for potential requests from US Bankruptcy Court.

Orders

  • Proceedings adjourned to a date not before 1st October 2009.
  • No permanent stay granted.