BNY Corporate Trustee Services Ltd v Eurosail- UK 2007- 3BL Plc & Ors

BNY Corporate Trustee Services Ltd v Eurosail- UK 2007- 3BL Plc & Ors

Eurosail is not unable to pay its debts within the meaning of section 123(2) of the Insolvency Act 1986 for the purposes of Condition 9(a)(iii) of the Conditions, as the value of its assets exceeds its present liabilities when contingent and prospective liabilities are properly taken into account. The PECO does not affect the calculation of liabilities under s.123(2).

Parties
Claimant: BNY Corporate Trustee Services Limited; 1st Defendant: Eurosail-UK 2007-3BL PLC; 2nd Defendant: Natixis; 3rd Defendant: Neuberger Berman Europe Ltd (on behalf of Sealink Funding Ltd); 4th Defendant: Orpington Structured Finance I Ltd; 5th Defendant: Municipality Finance PLC; 6th Defendant: Carrera Capital Finance Ltd; 7th Defendant: Patron EMF S.A.R.L.; 8th Defendant: Pamplona Credit Opportunities Master Fund
Jurisdiction
England and Wales
Judgment Date
30 July 2010
Procedural Posture
Civil (part 8 Claim) / Judgment on Preliminary Issues
Outcome
Declaration in favour of the Issuer and A2 Noteholders; first question answered in the negative; second question does not arise.
Legal Topics
Section 123(2) Insolvency Act 1986, Securitisation, Events of Default, PECO (post Enforcement Call Option Agreement), Valuation of Assets and Liabilities
Insolvency Law Banking and Finance Section 123(2) Insolvency Act 1986 Securitisation Events of Default PECO (post Enforcement Call Option Agreement) Valuation of Assets and Liabilities

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Parties

BNY Corporate Trustee Services Limited

Claimant

Eurosail-UK 2007-3BL PLC

1st Defendant

Natixis

2nd Defendant

Neuberger Berman Europe Ltd (on behalf of Sealink Funding Ltd)

3rd Defendant

Orpington Structured Finance I Ltd

4th Defendant

Municipality Finance PLC

5th Defendant

Carrera Capital Finance Ltd

6th Defendant

Patron EMF S.A.R.L.

7th Defendant

Pamplona Credit Opportunities Master Fund

8th Defendant

Procedural Posture

Civil (part 8 Claim) / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether Eurosail is unable to pay its debts within the meaning of section 123(2) of the Insolvency Act 1986 for the purposes of Condition 9(a)(iii) of the Conditions, without regard to the PECO.
  2. 2 If the answer to the first question is affirmative, whether the PECO has the effect that Eurosail is not unable to pay its debts within the meaning of section 123(2) for the purposes of Condition 9(a)(iii).

Ratio Decidendi

Eurosail is not unable to pay its debts within the meaning of section 123(2) of the Insolvency Act 1986 for the purposes of Condition 9(a)(iii) of the Conditions, as the value of its assets exceeds its present liabilities when contingent and prospective liabilities are properly taken into account. The PECO does not affect the calculation of liabilities under s.123(2).

Court Disposition

Declaration in favour of the Issuer and A2 Noteholders; first question answered in the negative; second question does not arise.

Orders

  • Declaration that Eurosail is not unable to pay its debts within the meaning of section 123(2) of the Insolvency Act 1986 for the purposes of Condition 9(a)(iii) of the Conditions.