Law Debenture Trust Corporation Plc v Elektrim Finance BV & Ors [2005] EWHC 1999 (Ch) (14 September 2005)

Law Debenture Trust Corporation Plc v Elektrim Finance BV & Ors [2005] EWHC 1999 (Ch) (14 September 2005)

The court held that all four alleged events of default had occurred: (1) the suspension of the bondholder-nominated director breached the deed's requirement for consensus of the entire management board and was materially prejudicial; (2) the seizure of Megadex's bank accounts by Polish tax authorities constituted a 'seizure' under the event of default clause; (3) non-payment of interest was not excused as the trustee was entitled to withhold funds pending indemnification for costs; (4) the filing of a bankruptcy petition, even if later withdrawn, constituted initiation of bankruptcy proceedings under the deed. Accordingly, the claimant was entitled to summary judgment.

Citation
[2005] EWHC 1999 (Ch)
Parties
Claimant: The Law Debenture Trust Corporation p.l.c.; First Defendant: Elektrim Finance B.V.; Second Defendant: Elektrim S.A.; Third Defendant: Concord Trust
Jurisdiction
England and Wales
Judgment Date
14 September 2005
Procedural Posture
Commercial Summary Judgment Application / High Court (chancery Division) Summary Judgment
Outcome
Summary judgment granted for the claimant.
Legal Topics
Events of Default, Bond Trust Deeds, Summary Judgment, Trustee Powers, Contractual Interpretation, Insolvency Proceedings
Commercial Law Trusts and Trustees Banking and Finance Events of Default Bond Trust Deeds Summary Judgment Trustee Powers Contractual Interpretation +1 more

Case Brief

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Parties

The Law Debenture Trust Corporation p.l.c.

Claimant

Elektrim Finance B.V.

First Defendant

Elektrim S.A.

Second Defendant

Concord Trust

Third Defendant

Procedural Posture

Commercial Summary Judgment Application / High Court (chancery Division) Summary Judgment

Legal Issues

  1. 1 Whether four alleged events of default under the bond trust deed occurred, entitling the claimant trustee to accelerate repayment and obtain summary judgment;
  2. 2 Whether the suspension of the bondholder-nominated director constituted a breach of the trust deed and a materially prejudicial event of default;
  3. 3 Whether the seizure of a subsidiary's bank accounts by Polish tax authorities constituted a seizure under the relevant event of default clause;

Ratio Decidendi

The court held that all four alleged events of default had occurred: (1) the suspension of the bondholder-nominated director breached the deed's requirement for consensus of the entire management board and was materially prejudicial; (2) the seizure of Megadex's bank accounts by Polish tax authorities constituted a 'seizure' under the event of default clause; (3) non-payment of interest was not excused as the trustee was entitled to withhold funds pending indemnification for costs; (4) the filing of a bankruptcy petition, even if later withdrawn, constituted initiation of bankruptcy proceedings under the deed. Accordingly, the claimant was entitled to summary judgment.

Court Disposition

Summary judgment granted for the claimant.

Orders

  • Declaration that the four events of default occurred under the trust deed.
  • Acceleration of repayment date for the bonds to the date of the relevant acceleration notice.