Update â Waterfall II Application (the â Applicationâ ) â Agreed Positions - 22 October 2015

In respect of Tranche C of the Application, the parties have reached agreed positions on Issues 16, 18 and 27 (together the “Agreed Positions”) as set out below. Subject to any creditor notifying the Joint Administrators of its disagreement with any of the Agreed Positions, the Joint Administrators intend to invite the Court to give directions in accordance with the Agreed Positions.

The Agreed Positions are:

Issue 16

Whether only the relevant payee (in accordance with the meaning of such term determined pursuant to question 10 above), or another party (whether authorised by the relevant payee or not) can provide certification of the cost of funding and, if the former, what the position should be if the relevant payee is not capable of providing such certification (for example because it has been wound up or dissolved).

The parties¹ consider that the answer to Issue 16 is as follows (and will invite the Court to give directions accordingly):

“The relevant payee and anyone expressly or impliedly authorised by the relevant payee can provide certification of the cost of funding.

Whether or not, in any particular case, the relevant payee has expressly or impliedly authorised another person to provide certification of the cost of funding on its behalf is a question of fact to be determined on a case-by-case basis.

In circumstances where the relevant payee is incapable (either itself or through the agency of another) of certifying its cost of funding the relevant amount, the court will put itself in the shoes of the relevant payee to determine what decision it would have made had it determined its cost of funding properly.”

Issue 18

Whether the power of a party under section 7(b) of the 1992 form ISDA Master Agreement to transfer any amount payable to it from a Defaulting Party under section 6(e) without the prior written consent of that party included the power to transfer any contractual right to interest under that agreement.

The parties consider that the answer to Issue 18 is as follows (and will invite the Court to give directions accordingly):

“The power of a party under section 7(b) of the 1992 ISDA Master Agreement to transfer any amount payable to it from a Defaulting Party under section 6(e) without the prior written consent of that party includes the power to transfer any contractual right to interest under that agreement.”

Issue 27

Whether, and if so how, the answers to questions 10 to 16 and 18 to 21 would be impacted where the “relevant payee” is:

(i) a Credit Institution or Financial Institution; 
(ii) a Fund Entity; or 
(iii) a corporate or other type of counterparty. 

The parties consider that the answer to Issue 27 is as follows (and will invite the Court to give directions accordingly):

“The answers to questions 10 to 16 and 18 to 21 are not impacted by whether the relevant payee is a Credit Institution, Financial Institution, a Fund Entity, a corporate or any other type of counterpart.

¹ Goldman Sachs International was joined in respect of Issues 11-14 and 27 only. The term “parties” used in relation to Issues 16 and 18 therefore refers only to the SCG, Wentworth and the Joint Administrators.

Any creditor which disagrees with any of the above positions agreed between the parties to the Application should contact the LBIE Administrators at unsecuredcreditors@lbia-eu.com by no later than 4pm on Wednesday 4 November 2015.”