Napier Park European Credit Opportunities Fund Lt v Harbourmaster Pro-Rata Clo 2 B.V. & Ors

Napier Park European Credit Opportunities Fund Lt v Harbourmaster Pro-Rata Clo 2 B.V. & Ors

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, regardless of any subsequent upgrade. The natural and ordinary meaning of the words refers to any past downgrade, and the drafting elsewhere in the documentation shows that the drafter distinguished between continuing and past events. Therefore, the claimant's interpretation is rejected and the claim is dismissed.

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 known as Harbourmaster Capital Limited); Fourth Defendant: Deutsche Trustee Company Limited
Jurisdiction
England and Wales
Judgment Date
09 April 2014
Procedural Posture
Civil (commercial/contract) / Judgment After Trial of Preliminary Issue (declaratory Relief)
Outcome
Claim dismissed
Legal Topics
Interpretation of Contract Terms, Collateralised Loan Obligations (clo), Reinvestment Criteria, Credit Ratings and Downgrades, Declaratory Relief
Contract Law Banking and Finance Law Interpretation of Contract Terms Collateralised Loan Obligations (clo) Reinvestment Criteria Credit Ratings and Downgrades Declaratory Relief

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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 known as Harbourmaster Capital Limited)

Third Defendant

Deutsche Trustee Company Limited

Fourth Defendant

Procedural Posture

Civil (commercial/contract) / Judgment After Trial of Preliminary Issue (declaratory Relief)

Legal Issues

  1. 1 Whether Paragraph 4(i) of the Reinvestment Criteria in the Collateral Management Agreement is satisfied if the Senior Notes were downgraded below their Initial Ratings but subsequently upgraded
  2. 2 Whether Unscheduled Principal Proceeds (UPP) can be reinvested after a past downgrade of Senior Notes

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, regardless of any subsequent upgrade. The natural and ordinary meaning of the words refers to any past downgrade, and the drafting elsewhere in the documentation shows that the drafter distinguished between continuing and past events. Therefore, the claimant's interpretation is rejected and the claim is dismissed.

Court Disposition

Claim dismissed

Orders

  • The claim for a declaration as to the meaning of Paragraph 4(i) of the Reinvestment Criteria is dismissed.