Napier Park European Credit Opportunities Fund Lt v Harbourmaster Pro-Rata Clo 2 B.V. & Ors [2014] EWHC 1083 (Ch) (09 April 2014)

Napier Park European Credit Opportunities Fund Lt v Harbourmaster Pro-Rata Clo 2 B.V. & Ors [2014] EWHC 1083 (Ch) (09 April 2014)

Paragraph 4(i) of the Reinvestment Criteria is clear and unambiguous: it is not satisfied if the Senior Notes have at any time been downgraded below their Initial Ratings. A subsequent upgrade does not cure the failure. Therefore, Unscheduled Principal Proceeds cannot be reinvested after such a downgrade.

Citation
[2014] EWHC 1083 (Ch)
Parties
Claimant: Napier Park European Credit Opportunities Fund Limited; First Defendant: Harbourmaster Pro-Rata CLO 2 B.V.; Second Defendant: Deutsche Bank AG, London Branch; Third Defendant: Blackstone/GSO Debt Funds Europe Limited (formerly Harbourmaster Capital Limited); Fourth Defendant: Deutsche Trustee Company Limited
Jurisdiction
England and Wales
Judgment Date
09 April 2014
Procedural Posture
Commercial Claim for Declaratory Relief / Judgment After Hearing
Outcome
Claim dismissed
Legal Topics
Contractual Interpretation, Collateralised Loan Obligations, Reinvestment Criteria, Credit Ratings, Waterfall Provisions
Commercial Law Financial Services Law Contractual Interpretation Collateralised Loan Obligations Reinvestment Criteria Credit Ratings Waterfall Provisions

Case Brief

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Parties

Napier Park European Credit Opportunities Fund Limited

Claimant

Harbourmaster Pro-Rata CLO 2 B.V.

First Defendant

Deutsche Bank AG, London Branch

Second Defendant

Blackstone/GSO Debt Funds Europe Limited (formerly Harbourmaster Capital Limited)

Third Defendant

Deutsche Trustee Company Limited

Fourth Defendant

Procedural Posture

Commercial Claim for Declaratory Relief / Judgment After Hearing

Legal Issues

  1. 1 Whether Paragraph 4(i) of the Reinvestment Criteria is satisfied if Senior Notes were downgraded but subsequently upgraded
  2. 2 Whether Unscheduled Principal Proceeds may be reinvested after a prior downgrade

Ratio Decidendi

Paragraph 4(i) of the Reinvestment Criteria is clear and unambiguous: it is not satisfied if the Senior Notes have at any time been downgraded below their Initial Ratings. A subsequent upgrade does not cure the failure. Therefore, Unscheduled Principal Proceeds cannot be reinvested after such a downgrade.

Court Disposition

Claim dismissed