LB Re Financing No. 3 Ltd v Excalibur Funding No.1 Plc & Ors [2011] EWHC 2111 (Ch) (29 July 2011)

LB Re Financing No. 3 Ltd v Excalibur Funding No.1 Plc & Ors [2011] EWHC 2111 (Ch) (29 July 2011)

Although an Event of Default occurred on 25 January 2011 due to the Par Coverage Numerator falling below 100% (excluding Principal Account balances), that default did not continue beyond the payment of redemption money on 28 January 2011. Therefore, there was no continuing Event of Default when the Acceleration Notice was served on 8 February 2011.

Citation
[2011] EWHC 2111 (Ch)
Parties
Claimant: LB Re Financing No. 3 Limited (in administration); First Defendant: Excalibur Funding No.1 PLC; Second Defendant: Deutsche Bundesbank; Third Defendant: US Bank Trustees Limited
Jurisdiction
England and Wales
Judgment Date
29 July 2011
Procedural Posture
Part 8 Claim (construction of Trust Deed/notes) / First Instance Judgment
Outcome
Claimant succeeds; declaration that there was no continuing Event of Default at the time of the Acceleration Notice.
Legal Topics
Securitisation, Trust Deed Construction, Events of Default, Interpretation of Commercial Contracts
Banking and Finance Commercial Law Securitisation Trust Deed Construction Events of Default Interpretation of Commercial Contracts

Case Brief

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Parties

LB Re Financing No. 3 Limited (in administration)

Claimant

Excalibur Funding No.1 PLC

First Defendant

Deutsche Bundesbank

Second Defendant

US Bank Trustees Limited

Third Defendant

Procedural Posture

Part 8 Claim (construction of Trust Deed/notes) / First Instance Judgment

Legal Issues

  1. 1 Whether an Event of Default under Condition 10(a)(iv) (Inadequate Par Coverage) had occurred and was continuing at the time of the Acceleration Notice
  2. 2 Proper construction of Condition 10(a)(iv) and related definitions in the Trust Deed

Ratio Decidendi

Although an Event of Default occurred on 25 January 2011 due to the Par Coverage Numerator falling below 100% (excluding Principal Account balances), that default did not continue beyond the payment of redemption money on 28 January 2011. Therefore, there was no continuing Event of Default when the Acceleration Notice was served on 8 February 2011.

Court Disposition

Claimant succeeds; declaration that there was no continuing Event of Default at the time of the Acceleration Notice.

Orders

  • Declaration that no continuing Event of Default existed on 8 February 2011 under Condition 10(a)(iv).