Post by Sapphire Capital on Jul 17, 2008 20:09:21 GMT 4
As some cases fester in the US judicial system, other claimants are bringing their disputes about structured investment vehicles (Sivs) to the UK courts for quicker resolution.
"We're finding that when we go to the US courts for help on construction matters, we get bogged down. There's a less rigid timeline," said one restructuring lawyer. "It's useful that the UK courts are churning out these decisions to enable Siv restructuring to move on."
Last week, the chancery division of the High Court of Justice ruled on a case between the security trustee and creditors of the Orion Siv. Although Orion's security agreement is governed by New York law, the trustee, Bank of New York, chose to file its claim in the UK.
UK courts were able to settle the Orion case thanks to clause 9.7 of the security agreement which submits the agreement to the jurisdiction of New York and England.
The case concerned the right of senior noteholders to direct the security trustee to sell Orion's collateral in the event of a default. While senior noteholders claimed the right to demand an immediate sale, subordinated creditors wanted to wait for the market to improve in order to maximise return.
The court ruled that, under Article 9-610 of New York's Uniform Commercial Code, the security trustee was charged with disposing collateral in the event of a default, and that "every aspect of a disposition of collateral... must be commercially reasonable."
The ruling vindicated subordinated noteholders and confirmed the rights of the security trustee to postpone a collateral sale until markets improve.
But as one restructuring lawyer points out, this decision may have little impact on other Siv cases: "Everyone gets very excited when these judgements come out but because they're very fact specific it's hard to apply one ruling to another case."
"We're finding that when we go to the US courts for help on construction matters, we get bogged down. There's a less rigid timeline," said one restructuring lawyer. "It's useful that the UK courts are churning out these decisions to enable Siv restructuring to move on."
Last week, the chancery division of the High Court of Justice ruled on a case between the security trustee and creditors of the Orion Siv. Although Orion's security agreement is governed by New York law, the trustee, Bank of New York, chose to file its claim in the UK.
UK courts were able to settle the Orion case thanks to clause 9.7 of the security agreement which submits the agreement to the jurisdiction of New York and England.
The case concerned the right of senior noteholders to direct the security trustee to sell Orion's collateral in the event of a default. While senior noteholders claimed the right to demand an immediate sale, subordinated creditors wanted to wait for the market to improve in order to maximise return.
The court ruled that, under Article 9-610 of New York's Uniform Commercial Code, the security trustee was charged with disposing collateral in the event of a default, and that "every aspect of a disposition of collateral... must be commercially reasonable."
The ruling vindicated subordinated noteholders and confirmed the rights of the security trustee to postpone a collateral sale until markets improve.
But as one restructuring lawyer points out, this decision may have little impact on other Siv cases: "Everyone gets very excited when these judgements come out but because they're very fact specific it's hard to apply one ruling to another case."