The parties disputed whether the respondent was in law insolvent at the time it entered into financial transactions with it.
Held: The Court rejected the Noteholders’ submission that Eurosail was plainly insolvent for the purposes of section 123(2) as applied, relying on four points. First, Eurosail’s claims in the insolvencies of other companies, though not admitted, could not be ignored. The secondary market indicated that the claim was worth a value of the order of andpound;60m. Second, a large part of the total deficiency that was claimed to exist was due to conversion into sterling at the prevailing spot rate of liabilities not due for payment until 2045. Third, the future liabilities were fully funded in the limited sense that deficiencies resulting from mortgage defaults reduced Eurosail’s liability to the Noteholders through the operation of the Principal Deficiency Ledger. Fourth, the Chancellor was able to infer that a calculation of the then present values of assets and liabilities would not show a deficiency, since Eurosail was well able to pay its debts as they fell due, there was no deficiency on the Principal Deficiency Ledger, and projected redemptions of each class of A Notes were in advance of the maturity dates.
Judges:
Sir Andrew Morritt C
Citations:
[2011] 1 WLR 1200, [2010] EWHC 2005 (Ch), [2010] Bus LR 1731
Links:
Statutes:
Jurisdiction:
England and Wales
Cited by:
Appeal from – BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL Plc and Others CA 7-Mar-2011
The court was asked questions to interpret the terms of interest-bearing notes, which were issued by Eurosail-UK 2007-3BL PLC, a special purpose vehicle formed to hold income-producing assets, consisting of mortgage loans, to be used to meet the . .
At First Instance – BNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .
Lists of cited by and citing cases may be incomplete.
Contract, Insolvency
Updated: 22 August 2022; Ref: scu.421238