Fondazione Enasarco v Lehman Brothers Finance SA & Anor

Fondazione Enasarco v Lehman Brothers Finance SA & Anor

ARIC validly determined its Loss under the ISDA Master Agreement by reference to the cost of a replacement transaction with Credit Suisse obtained at the first reasonably practicable date after the Early Termination Date. The terms of the replacement transaction were sufficiently comparable, and delay in providing the calculation statement did not affect the validity of the Loss determination. Enasarco is entitled to payment from LBF.

Parties
Claimant: Fondazione Enasarco; Defendant/part 20 Defendant: Lehman Brothers Finance S.A.; Defendant/part 20 Claimant: Anthracite Rated Investments (Cayman) Limited
Jurisdiction
England and Wales
Judgment Date
12 May 2015
Procedural Posture
Commercial / Final Judgment
Outcome
Claim allowed
Legal Topics
ISDA Master Agreement, Loss Calculation, Early Termination, Principal Protection, CPPI Structures
Contract Law Financial Derivatives Banking Law ISDA Master Agreement Loss Calculation Early Termination Principal Protection CPPI Structures

Case Brief

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Parties

Fondazione Enasarco

Claimant

Lehman Brothers Finance S.A.

Defendant/part 20 Defendant

Anthracite Rated Investments (Cayman) Limited

Defendant/part 20 Claimant

Procedural Posture

Commercial / Final Judgment

Legal Issues

  1. 1 Whether ARIC validly determined its Loss under the ISDA Master Agreement after automatic early termination of the Put Option
  2. 2 Whether the replacement transaction with Credit Suisse was obtained at the earliest reasonably practicable date
  3. 3 Whether the terms of the Credit Suisse Option were sufficiently comparable to the original Put Option for Loss calculation

Ratio Decidendi

ARIC validly determined its Loss under the ISDA Master Agreement by reference to the cost of a replacement transaction with Credit Suisse obtained at the first reasonably practicable date after the Early Termination Date. The terms of the replacement transaction were sufficiently comparable, and delay in providing the calculation statement did not affect the validity of the Loss determination. Enasarco is entitled to payment from LBF.

Court Disposition

Claim allowed

Orders

  • LBF to pay Enasarco US $61,507,902 plus interest
  • Declaration that no sums are payable by Enasarco or ARIC to LBF