LB Re Financing No. 3 Ltd v Excalibur Funding No.1 Plc & Ors

LB Re Financing No. 3 Ltd v Excalibur Funding No.1 Plc & Ors

Although an Event of Default occurred on the Measurement Date (25 January 2011) due to the Par Coverage Numerator falling below 100% of the Principal Amount Outstanding, the default did not continue beyond the Payment Date (28 January 2011) when redemption payments remedied the deficiency. Therefore, there was no continuing Event of Default when the Notice of Acceleration was served.

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
Civil / Judgment
Outcome
Claim allowed in part; declaration that no continuing Event of Default existed when Notice of Acceleration was served.
Legal Topics
Securitisation, Trust Deeds, Events of Default, Interpretation of Contracts, Commercial Absurdity
Commercial Law Banking Law Contract Law Securitisation Trust Deeds Events of Default Interpretation of Contracts Commercial Absurdity

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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

Civil / Judgment

Legal Issues

  1. 1 Whether an Event of Default under Condition 10(a)(iv) (Inadequate Par Coverage) had occurred and was continuing when the Notice of Acceleration was served.
  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 the Measurement Date (25 January 2011) due to the Par Coverage Numerator falling below 100% of the Principal Amount Outstanding, the default did not continue beyond the Payment Date (28 January 2011) when redemption payments remedied the deficiency. Therefore, there was no continuing Event of Default when the Notice of Acceleration was served.

Court Disposition

Claim allowed in part; declaration that no continuing Event of Default existed when Notice of Acceleration was served.

Orders

  • Declaration that the Event of Default did not continue beyond the Payment Date.
  • Notice of Acceleration served on 8 February 2011 was invalid.