Vol 20 (2023) - Issue 1

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Grant & Ors v FR Acquisitions Corporation (Europe) Ltd & Anor (Re Lehman Brothers International (Europe)) [2022] EWHC 2532 (Ch)

Synopsis
This case, the latest in the long-running litigation saga following the demise of Lehman Brothers, concerned an application for directions by the administrators of Lehman Brothers International (Europe) (in administration) ('LBIE') concerning various standard-form Events of Default provisions under the 1992 and 2002 ISDA Master Agreements. The key issue in dispute was whether LBIE's entry into administration and certain subsequent events during its administration (namely its implementation of a creditor scheme of arrangement under Part 26 of the Companies Act 2006 (the 'Scheme'), recognised under Chapter 15 of the US Bankruptcy Code (the 'Chapter 15 Order')) were 'continuing' Events of Default. If this was the case, was a swap counterparty therefore able to continue to withhold payment of principal to LBIE? Or was it the case that, following the (anticipated) termination of the administration and return of LBIE to its directors, no Event of Default would be continuing, such that payment to LBIE would be due. The court gave judgment in favour of the administrators, deciding that the Scheme and Chapter 15 Order were not Events of Default at all and accepting the administrators' interpretation of the word 'continuing' in respect of the administration, so its termination would cure the Event of Default and payment under the relevant swaps would be due.