CBRE Loan Servicing Ltd v Gemini (Eclipse 2006-3) Plc [2015] EWHC 2769 (Ch) (07 October 2015)

CBRE Loan Servicing Ltd v Gemini (Eclipse 2006-3) Plc [2015] EWHC 2769 (Ch) (07 October 2015)

Receipts should be characterised by their commercial source and function: rental income is 'interest', while proceeds of sale and surrender premiums are 'principal'. This aligns with the structure and commercial purpose of the securitisation and the intended subordination of the Notes.

Citation
[2015] EWHC 2769 (Ch)
Parties
Claimant: CBRE Loan Servicing Limited; Defendant: Gemini (Eclipse 2006-3) PLC; Defendant: BNY Mellon Corporate Trustee Services Limited; Defendant: Danske Bank A/S; 9th Defendant (junior Noteholder Representative): Glastonbury Finance 2007-1 Plc; 10th Defendant (class a Noteholder Representative): The Class A Noteholder (identity not disclosed)
Jurisdiction
England and Wales
Judgment Date
07 October 2015
Procedural Posture
Part 8 Claim (cpr) / First Instance Judgment
Outcome
Declaratory judgment granted in favour of the class A Noteholders' primary case.
Legal Topics
Interpretation of Contractual Terms, Securitisation Waterfall Provisions, Priority of Payments, Characterisation of Receipts as Principal or Interest
Banking and Finance Contract Law Securitisation Interpretation of Contractual Terms Securitisation Waterfall Provisions Priority of Payments Characterisation of Receipts as Principal or Interest

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Parties

CBRE Loan Servicing Limited

Claimant

Gemini (Eclipse 2006-3) PLC

Defendant

BNY Mellon Corporate Trustee Services Limited

Defendant

Danske Bank A/S

Defendant

Glastonbury Finance 2007-1 Plc

9th Defendant (junior Noteholder Representative)

The Class A Noteholder (identity not disclosed)

10th Defendant (class a Noteholder Representative)

Procedural Posture

Part 8 Claim (cpr) / First Instance Judgment

Legal Issues

  1. 1 How should rent, surrender premiums, and sale proceeds be characterised (as principal or interest) under the Cash Management Agreement in the context of the securitisation structure?

Ratio Decidendi

Receipts should be characterised by their commercial source and function: rental income is 'interest', while proceeds of sale and surrender premiums are 'principal'. This aligns with the structure and commercial purpose of the securitisation and the intended subordination of the Notes.

Court Disposition

Declaratory judgment granted in favour of the class A Noteholders' primary case.

Orders

  • Rental income from the properties is to be classified as 'interest'.
  • Proceeds of sale of properties and surrender premiums are to be classified as 'principal'.