October 2012

The effectiveness of the restructuring technique known as “exit consent” has been cast into doubt by the English High Court.  During a recent consent solicitation, Assenagon Asset Management SA, a noteholder with a €17m holding in Anglo-Irish Bank (now IBRC) refused to vote in favour of an exchange offer that would have emanated in their holding being replaced with paper that was an eye watering 20% discount of their bonds face value. Assenagon’s reward for protecting their position was a €170 payout for their entire holding (0.00001% of face value). Unsurprisingly, litigation ensued and Assenagon were successful in obtaining a declaration that the exchange resolution was not valid.

Assenagon challenged the validity of the resolution on three fronts, the first two arguments were based on the construction of the Trust Deed whereas the third argument is significant to the market due to its general application:
Continue Reading Exit consent solicitation – an abuse of power

I suspect I may have been alone amongst viewers of the recent Singapore Grand Prix in that, rather than marvelling at the brilliance of Sebastian Vettel’s driving skills, my thoughts instead were on the world’s largest bankruptcy – Lehman Brothers. For those who have not been living and breathing the consequences of the financial sector’s greatest ever failure, the link between the cars and glamour of F1 and an insolvent investment bank may not be immediately obvious. However if you were to know that Lehman Brothers is still the second largest shareholder in the sport, with a 15.3 per cent stake in Formula One’s holding company, then the connection becomes clearer. Given the fourth anniversary of the bank’s demise was a few days ago, it is also a good time to think about how far we’ve come since the dark days of Autumn 2008, a time when many thought the world as we knew it was coming to an end. So, four years on, what have we learnt?
Continue Reading Lehman Car Crash