In Re Sigma Finance Corporation (in administrative receivership) and In Re The Insolvency Act 1986

In Re Sigma Finance Corporation (in administrative receivership) and In Re The Insolvency Act 1986

The Security Trust Deed, properly construed, does not require the Receivers to pay Short Term Liabilities falling due during the Realisation Period in priority to other Short Term Liabilities. All Short Term Liabilities are to be treated equally and paid pro rata from the Short Term Pool established under clauses 7.6 to 7.10.

Parties
Issuer: Sigma Finance Corporation; Security Trustee: Deutsche Trustee Company Limited; Interested Party/respondent: A; Interested Party/appellant: B; Interested Party/appellant: C; Interested Party/appellant: D; Receiver: Administrative Receiver
Jurisdiction
England and Wales
Judgment Date
29 October 2009
Procedural Posture
Civil Appeal / Final Appellate Judgment
Outcome
Appeals of parties C and D allowed; appeal of party B dismissed.
Legal Topics
Interpretation of Security Trust Deeds, Priority of Creditors, Distribution of Assets in Insolvency
Insolvency Contract Trusts Interpretation of Security Trust Deeds Priority of Creditors Distribution of Assets in Insolvency

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Parties

Sigma Finance Corporation

Issuer

Deutsche Trustee Company Limited

Security Trustee

A

Interested Party/respondent

B

Interested Party/appellant

C

Interested Party/appellant

D

Interested Party/appellant

Administrative Receiver

Receiver

Procedural Posture

Civil Appeal / Final Appellate Judgment

Legal Issues

  1. 1 How should Sigma's remaining assets be distributed among secured creditors under the Security Trust Deed?
  2. 2 Does clause 7.6 of the Security Trust Deed require payment of Short Term Liabilities falling due during the Realisation Period in priority to other liabilities?

Ratio Decidendi

The Security Trust Deed, properly construed, does not require the Receivers to pay Short Term Liabilities falling due during the Realisation Period in priority to other Short Term Liabilities. All Short Term Liabilities are to be treated equally and paid pro rata from the Short Term Pool established under clauses 7.6 to 7.10.

Court Disposition

Appeals of parties C and D allowed; appeal of party B dismissed.

Orders

  • Decisions of the courts below set aside.
  • Declaration that Receivers were not obliged to pay Short Term Liabilities falling due during the Realisation Period in priority or pari passu with other Short Term Liabilities.