Cheyne Finance Plc, Re

Cheyne Finance Plc, Re

Clause 12.1(b) of the Security Trust Deed is to be construed in accordance with the 'pay as you go' construction: Receivers must pay Senior Obligations as they fall due in full, then use any surplus to provide for future Senior Obligations, and only move to junior priorities if a surplus remains after such provision. This construction aligns with the express objective in Clause 10.2 and the commercial purpose of the agreement.

Parties
Receiver: Nicholas Edwards, Neville Kahn and Nicholas Dargan (Deloitte & Touche LLP); Beneficiary: Party A; Beneficiary: Party B
Jurisdiction
England and Wales
Judgment Date
12 September 2007
Procedural Posture
Insolvency Application (directions) / Judgment on Application for Directions
Outcome
Application for directions allowed; court adopts 'pay as you go' construction.
Legal Topics
Receivership, Security Trust Deed Construction, Priority of Payments, Interpretation of Contractual Terms
Insolvency Law Contract Law Receivership Security Trust Deed Construction Priority of Payments Interpretation of Contractual Terms

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Parties

Nicholas Edwards, Neville Kahn and Nicholas Dargan (Deloitte & Touche LLP)

Receiver

Party A

Beneficiary

Party B

Beneficiary

Procedural Posture

Insolvency Application (directions) / Judgment on Application for Directions

Legal Issues

  1. 1 Proper construction of Clause 12.1(b) of the Security Trust Deed regarding payment and provision for Senior Obligations prior to an Insolvency Event

Ratio Decidendi

Clause 12.1(b) of the Security Trust Deed is to be construed in accordance with the 'pay as you go' construction: Receivers must pay Senior Obligations as they fall due in full, then use any surplus to provide for future Senior Obligations, and only move to junior priorities if a surplus remains after such provision. This construction aligns with the express objective in Clause 10.2 and the commercial purpose of the agreement.

Court Disposition

Application for directions allowed; court adopts 'pay as you go' construction.

Orders

  • Receivers to apply Clause 12.1(b) in accordance with the 'pay as you go' construction as set out in the judgment.