Update â Waterfall II Application (the â Applicationâ ) â French law issues - 14 September 2015

The LBIE Administrators refer to Issues 22 to 26 of the Application (the “French Law Issues”) and the order of Mr Justice David Richards following the case management conference held on 9 March 2015 (the “Order”). 

The French Law Issues were included in the Application in order to address issues arising from the AFB Master Agreement, the AFTB Master Agreement, the AFTI Master Agreement and the FBF Master Agreement, as those terms are defined in the Application. 

Pursuant to the Order, the Senior Creditor Group and Wentworth each served position papers covering the French Law Issues and reports of experts in French law. Copies of the position papers and expert reports were published on the LBIE website and are available here.

The purpose of this update is to inform creditors of recent developments in respect of the French Law Issues and to request that they contact the LBIE Administrators should they take issue with the proposed course of action set out under Section 1.

Section 1 – AFB Master Agreement and FBF Master Agreement

On 11 September 2015, the Senior Creditor Group and Wentworth advised the LBIE Administrators of their agreed position in respect of the French Law Issues, insofar as the issues concerned the Euro-denominated claims arising under the AFB Master Agreement and the FBF Master Agreement (the “Agreed Position”). A copy of the Agreed Position is available here.

In light of the above, the LBIE Administrators’ current intention is to take appropriate steps at the Pre-Trial Review of the Tranche C trial on 9 October 2015 in order to effect the withdrawal of all French Law Issues from the Application.

The LBIE Administrators intend to deal with the assessment of creditors’ claims to interest arising out of the AFB Master Agreement and the FBF Master Agreement in accordance with the Agreed Position. Any creditor which disagrees with the Agreed Position (or a part of it) or wishes to take issue with the LBIE Administrators’ approach to dealing with the assessment of its claim to interest arising out of the AFB Master Agreement and FBF Master Agreement, as outlined above, should contact the LBIE Administrators at unsecuredcreditors@lbia-eu.com as soon as possible and in any event by no later than 4.00pm on 7 October 2015.

Section 2 – AFTB Master Agreement and AFTI Master Agreement

The Senior Creditor Group and Wentworth have proposed to the LBIE Administrators that the removal of the questions relating to the AFTB Master Agreement and the AFTI Master Agreement be removed from the Application. The proposal was made because the total principal value of the five claims under the two master agreements is approximately £1.2 million and, accordingly, de minimis to the Application. The LBIE Administrators’ view is that it would be disproportionate to deal with the five claims at the Tranche C trial and, accordingly, have agreed to the proposal advanced by the Senior Creditor Group and Wentworth.

Regarding the AFTB Master Agreement and the AFTI Master Agreement, the LBIE Administrators intend to deal with the assessment of creditors’ claims to interest arising out of those two master agreements on a case-by-case basis in the course of the LBIE administration. Should you have any queries regarding this update, please contact LBIE’s Communications and Counterparty Management team at generalqueries@lbia-eu.com.