Citibank NA, London Branch v Oceanwood Opportunities Master Fund & Ors [2018] EWHC 448 (Ch) (08 March 2018)

Citibank NA, London Branch v Oceanwood Opportunities Master Fund & Ors [2018] EWHC 448 (Ch) (08 March 2018)

The 'control' referred to in section 2.09 of the Indenture does not include control arising solely from majority noteholding or the exercise of rights under the loan documentation. Control must arise from circumstances external to the loan documentation. Oceanwood's 51% holding and actions do not constitute 'control' for the purposes of section 2.09, and its votes are not to be disregarded. Instructions given by Oceanwood as majority holder are valid under the Intercreditor Agreement.

Citation
[2018] EWHC 448 (Ch)
Parties
Claimant: Citibank, N.A., London Branch; First Defendant: Oceanwood Opportunities Master Fund; Second Defendant: Foxhill Capital Partners LLC; Third Defendant: Foxhill Opportunity Fund L.P.
Jurisdiction
England and Wales
Judgment Date
08 March 2018
Procedural Posture
Part 8 Claim for Directions / Final Judgment After Expedited Trial
Outcome
Claim for directions granted; Oceanwood's votes are not to be disregarded under section 2.09.
Legal Topics
Interpretation of Loan Documentation, Majority Creditor Rights, Control Provisions, Security Enforcement, Jurisdictional Issues
Banking and Finance Contract Law Insolvency Interpretation of Loan Documentation Majority Creditor Rights Control Provisions Security Enforcement Jurisdictional Issues

Case Brief

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Parties

Citibank, N.A., London Branch

Claimant

Oceanwood Opportunities Master Fund

First Defendant

Foxhill Capital Partners LLC

Second Defendant

Foxhill Opportunity Fund L.P.

Third Defendant

Procedural Posture

Part 8 Claim for Directions / Final Judgment After Expedited Trial

Legal Issues

  1. 1 Whether Oceanwood is disqualified from voting as majority noteholder under section 2.09 of the Indenture due to 'control' of the Issuer
  2. 2 Whether instructions given by Oceanwood as majority holder constitute valid directions under the Intercreditor Agreement
  3. 3 Whether de facto control by Oceanwood triggers disqualification under section 2.09

Ratio Decidendi

The 'control' referred to in section 2.09 of the Indenture does not include control arising solely from majority noteholding or the exercise of rights under the loan documentation. Control must arise from circumstances external to the loan documentation. Oceanwood's 51% holding and actions do not constitute 'control' for the purposes of section 2.09, and its votes are not to be disregarded. Instructions given by Oceanwood as majority holder are valid under the Intercreditor Agreement.

Court Disposition

Claim for directions granted; Oceanwood's votes are not to be disregarded under section 2.09.

Orders

  • Citibank may follow directions from Oceanwood as majority noteholder under the Intercreditor Agreement.
  • Oceanwood is not disqualified from voting as majority holder under section 2.09 of the Indenture.