Grupo Hotelero Urvasco SA v Carey Value Added SL & Anor

Grupo Hotelero Urvasco SA v Carey Value Added SL & Anor

Carey was entitled to withhold further advances under the Loan Agreement as GHU was in default as at 6 June 2008, including by reason of negotiations for rescheduling indebtedness (event of default) and material breaches of development obligations. No material adverse change (MAC) was established for GHU or Urvasco Ltd, but defaults under the BBVA Credit Agreement and development defaults sufficed. GHU was not entitled to relief from repayment under clause 6.17 SPA, and could not have completed the development even if Carey had performed. Carey's counterclaim for repayment succeeded; GHU's damages claim failed.

Parties
Claimant/defendant (folio 931/1692): Grupo Hotelero Urvasco S.A. (GHU); Defendant/claimant (folio 931/1692): Carey Value Added S.L. (formerly Losan Hotels World Value Added I S.L.); Defendant (folio 931): London Value Added I Limited; Defendant/claimant (folio 1692): Grupo Urvasco S.A. (GU)
Jurisdiction
England and Wales
Judgment Date
26 April 2013
Procedural Posture
Commercial Contractual Dispute (loan and Development Agreements) / Final Judgment After Full Trial
Outcome
Judgment for Carey on its counterclaim; GHU's claim dismissed.
Legal Topics
Material Adverse Change (mac) Clauses, Loan Default and Enforcement, Development Funding, Waiver and Estoppel, Damages for Breach of Contract, Guarantee Liability, Construction Project Management, Intercreditor Agreements
Contract Law Banking and Finance Law Construction Law Material Adverse Change (mac) Clauses Loan Default and Enforcement Development Funding Waiver and Estoppel Damages for Breach of Contract +3 more

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Parties

Grupo Hotelero Urvasco S.A. (GHU)

Claimant/defendant (folio 931/1692)

Carey Value Added S.L. (formerly Losan Hotels World Value Added I S.L.)

Defendant/claimant (folio 931/1692)

London Value Added I Limited

Defendant (folio 931)

Grupo Urvasco S.A. (GU)

Defendant/claimant (folio 1692)

Procedural Posture

Commercial Contractual Dispute (loan and Development Agreements) / Final Judgment After Full Trial

Legal Issues

  1. 1 Whether GHU was in default under the Loan Agreement as at 6 June 2008
  2. 2 Whether Carey was entitled to withhold further advances under the Loan Agreement
  3. 3 Whether there was a material adverse change (MAC) in the financial condition of GU, GHU, or Urvasco Ltd

Ratio Decidendi

Carey was entitled to withhold further advances under the Loan Agreement as GHU was in default as at 6 June 2008, including by reason of negotiations for rescheduling indebtedness (event of default) and material breaches of development obligations. No material adverse change (MAC) was established for GHU or Urvasco Ltd, but defaults under the BBVA Credit Agreement and development defaults sufficed. GHU was not entitled to relief from repayment under clause 6.17 SPA, and could not have completed the development even if Carey had performed. Carey's counterclaim for repayment succeeded; GHU's damages claim failed.

Court Disposition

Judgment for Carey on its counterclaim; GHU's claim dismissed.

Orders

  • GHU and GU to repay advances and interest to Carey (exact sum to be agreed, principal €55.4m plus interest)
  • Carey to give credit for amounts received under the HCC bond