Agrimarche Ltd, Re [2010] EWHC 1655 (Ch) (05 July 2010)

Agrimarche Ltd, Re [2010] EWHC 1655 (Ch) (05 July 2010)

The company's call option contracts did not require physical delivery but only a cash payment calculated by reference to LIFFE or MATIF futures. Options could be exercised at any time during their validity, entitling the grantee to immediate cash payment. There was no implied or express term for automatic exercise of 'in the money' options at expiry. The liquidator is not compelled by equity or representations to treat such options as exercised. Claims must be valued at the date of liquidation, not administration.

Citation
[2010] EWHC 1655 (Ch)
Parties
Company: Agrimarche Limited (In Creditors' Voluntary Liquidation); Liquidator's Counsel: Sharif A Shivji
Jurisdiction
England and Wales
Judgment Date
05 July 2010
Procedural Posture
Directions Application in Liquidation / Judgment on Application for Directions
Outcome
Application for directions granted; court answered questions posed by liquidator.
Legal Topics
Valuation of Option Contracts, Implied Terms, Liquidation Claims, Exercise of Options, Administration and Liquidation
Insolvency Contract Valuation of Option Contracts Implied Terms Liquidation Claims Exercise of Options Administration and Liquidation

Case Brief

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Parties

Agrimarche Limited (In Creditors' Voluntary Liquidation)

Company

Sharif A Shivji

Liquidator's Counsel

Procedural Posture

Directions Application in Liquidation / Judgment on Application for Directions

Legal Issues

  1. 1 Whether call options required physical delivery or cash settlement
  2. 2 Whether options could be exercised before expiry and entitled immediate payment
  3. 3 Whether 'in the money' options at expiry were deemed exercised

Ratio Decidendi

The company's call option contracts did not require physical delivery but only a cash payment calculated by reference to LIFFE or MATIF futures. Options could be exercised at any time during their validity, entitling the grantee to immediate cash payment. There was no implied or express term for automatic exercise of 'in the money' options at expiry. The liquidator is not compelled by equity or representations to treat such options as exercised. Claims must be valued at the date of liquidation, not administration.

Court Disposition

Application for directions granted; court answered questions posed by liquidator.

Orders

  • Company's obligation under call options is to pay cash, not deliver commodity.
  • Options may be exercised at any time during validity, entitling to immediate cash payment.