Bank of New York v Montana Board of Investments & Anor [2008] EWHC 1594 (Ch) (10 July 2008)

Bank of New York v Montana Board of Investments & Anor [2008] EWHC 1594 (Ch) (10 July 2008)

The Security Agreement does not give Senior Creditors the right to specify the time, place and manner of sale of Collateral; exclusive discretion is vested in the Security Trustee, subject to commercial reasonableness and subordination provisions.

Citation
[2008] EWHC 1594 (Ch)
Parties
Claimant: The Bank of New York; First Defendant: Montana Board of Investments; Second Defendant: Party A; Third Defendant: Party B
Jurisdiction
England and Wales
Judgment Date
10 July 2008
Procedural Posture
Claim for Determination of Contractual Construction / Judgment Following Hearing
Outcome
Declaratory judgment; Senior Creditors do not have the right to direct the Security Trustee as to time, place and manner of sale.
Legal Topics
Structured Investment Vehicles, Security Trustee Duties, Contract Interpretation, Subordination of Creditors, New York Law
Banking and Finance Trusts and Trustees Contract Law Structured Investment Vehicles Security Trustee Duties Contract Interpretation Subordination of Creditors New York Law

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Parties

The Bank of New York

Claimant

Montana Board of Investments

First Defendant

Party A

Second Defendant

Party B

Third Defendant

Procedural Posture

Claim for Determination of Contractual Construction / Judgment Following Hearing

Legal Issues

  1. 1 Whether Senior Creditors have the right to direct the Security Trustee as to time, place and manner of sale of Orion's assets
  2. 2 Whether such direction, if it exists, is mandatory or discretionary
  3. 3 Whether the Security Agreement mandates specific timing for liquidation of Collateral after a Mandatory Acceleration Event

Ratio Decidendi

The Security Agreement does not give Senior Creditors the right to specify the time, place and manner of sale of Collateral; exclusive discretion is vested in the Security Trustee, subject to commercial reasonableness and subordination provisions.

Court Disposition

Declaratory judgment; Senior Creditors do not have the right to direct the Security Trustee as to time, place and manner of sale.

Orders

  • Senior Creditors' direction to Security Trustee is not binding as to time, place and manner of sale.
  • Any sale of Collateral must be conducted by Security Trustee in accordance with Section 5.6.1 and in a commercially reasonable manner.