The Bank of New York Mellon (London Branch) v Truvo NV & Ors [2013] EWHC 136 (Comm) (05 February 2013)

The Bank of New York Mellon (London Branch) v Truvo NV & Ors [2013] EWHC 136 (Comm) (05 February 2013)

The amendment to the order of application of mandatory prepayments under Clause 11.3 of the SFA did not constitute a change to the 'order of priority or subordination' under the ICA. Therefore, the amendment could be validly made with the consent of the Majority Lenders and Truvo, and did not require the consent of all lenders, including the Second Lien Lenders. The SFA and ICA distinguish between prepayment application and payment priority in insolvency or enforcement, and the contractual language and commercial context support this construction.

Citation
[2013] EWHC 136 (Comm)
Parties
Claimant: THE BANK OF NEW YORK MELLON (LONDON BRANCH); First Defendant: TRUVO N. V.; Second Defendant: DEUTSCHE BANK AG (LONDON BRANCH); Third Defendant: MILLAR INVESTMENTS S.À R. L.
Jurisdiction
England and Wales
Judgment Date
05 February 2013
Procedural Posture
Commercial Court Part 8 Claim / Judgment After Hearing on Construction of Contract
Outcome
Claim for declarations dismissed; amendment to Clause 11.3 of the SFA held valid with Majority Lender consent.
Legal Topics
Interpretation of Loan Agreements, Intercreditor Agreements, Amendment Provisions, Priority of Payments, Mandatory Prepayments
Banking and Finance Law Contract Law Interpretation of Loan Agreements Intercreditor Agreements Amendment Provisions Priority of Payments Mandatory Prepayments

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Parties

THE BANK OF NEW YORK MELLON (LONDON BRANCH)

Claimant

TRUVO N. V.

First Defendant

DEUTSCHE BANK AG (LONDON BRANCH)

Second Defendant

MILLAR INVESTMENTS S.À R. L.

Third Defendant

Procedural Posture

Commercial Court Part 8 Claim / Judgment After Hearing on Construction of Contract

Legal Issues

  1. 1 What level of lender consent was required to amend the mandatory prepayment provisions of the Senior Facilities Agreement (SFA)?
  2. 2 Does an amendment to the order of application of mandatory prepayments constitute a change to the 'order of priority or subordination' under the Intercreditor Agreement (ICA) requiring all-lender consent?

Ratio Decidendi

The amendment to the order of application of mandatory prepayments under Clause 11.3 of the SFA did not constitute a change to the 'order of priority or subordination' under the ICA. Therefore, the amendment could be validly made with the consent of the Majority Lenders and Truvo, and did not require the consent of all lenders, including the Second Lien Lenders. The SFA and ICA distinguish between prepayment application and payment priority in insolvency or enforcement, and the contractual language and commercial context support this construction.

Court Disposition

Claim for declarations dismissed; amendment to Clause 11.3 of the SFA held valid with Majority Lender consent.

Orders

  • Declarations sought by the Claimant refused.
  • Amendment to Clause 11.3 of the SFA is effective and binding.