London Capital & Finance Plc v Global Security Trustees Ltd

London Capital & Finance Plc v Global Security Trustees Ltd

GST should be removed as Security Trustee because its directors and shareholders failed to appreciate and address conflicts of interest, lacked relevant trustee experience, and the role of Security Trustee is largely redundant following LCF's administration. The bondholders' wishes and the need for confidence in the recovery regime weigh heavily. The court will appoint a new Security Trustee after further evidence on suitable candidates.

Parties
Claimant: London Capital & Finance Plc (in Administration); Defendant: Global Security Trustees Limited
Jurisdiction
England and Wales
Judgment Date
10 December 2019
Procedural Posture
Civil / Judgment
Outcome
GST removed as Security Trustee; new trustee to be appointed after further evidence.
Legal Topics
Removal of Trustee, Conflict of Interest, Administration of Insolvent Company, Security Trustee, Creditors' Interests
Trusts Insolvency Company Law Removal of Trustee Conflict of Interest Administration of Insolvent Company Security Trustee Creditors' Interests

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Parties

London Capital & Finance Plc (in Administration)

Claimant

Global Security Trustees Limited

Defendant

Procedural Posture

Civil / Judgment

Legal Issues

  1. 1 Whether GST should be removed as Security Trustee for LCF bondholders
  2. 2 Whether the court should appoint a new Security Trustee and by whom
  3. 3 Whether GST's conflicts of interest and lack of utility justify removal

Ratio Decidendi

GST should be removed as Security Trustee because its directors and shareholders failed to appreciate and address conflicts of interest, lacked relevant trustee experience, and the role of Security Trustee is largely redundant following LCF's administration. The bondholders' wishes and the need for confidence in the recovery regime weigh heavily. The court will appoint a new Security Trustee after further evidence on suitable candidates.

Court Disposition

GST removed as Security Trustee; new trustee to be appointed after further evidence.

Orders

  • GST is removed as Security Trustee with immediate effect, subject to counsel's submissions on timing.
  • Administrators to lodge further evidence on four identified candidates for Security Trustee, including likely costs.