LexisNexis Q&A

My Q&A with Lucy Karsten of LexisNexis can be viewed here.

Looking ahead to the Class X claims.


The Windermere VII Class X claims

In addition to the Titan Class X claims I wrote about in my earlier blog, similar issues were before the High Court on the Windermere VII CMBS case last week, as Hayfin-controlled vehicles argued that they had been underpaid Class X interest at the January and October 2015 IPDs (for different reasons on each IPD):

  • For the January IPD, they argue that the intercreditor agreement for one underlying loan was construed wrongly in circumstances where the loan was still outstanding but the associated swap had expired. this affected whether the expected available interest collections on that loan should be based on the fixed rate, the floating rate, or whichever was the higher of the two. Like the Titan claims there is also an argument about whether default interest under the loan should be taken into account when determining the Class X interest rate.
  • For the October IPD, they argue that the capitalisation of overdue interest on another loan should not have reduced the interest collections on the loans for the purposes of calculating the Class X interest amount.

As with the Titan claims, there is also an argument about what rate of interest applies to any historic unpaid Class X interest. The court is also asked to rule on whether the alleged underpayments amounted to Events of Default.

The hearing before Mr Justice Snowden ran a day longer than its original two day schedule as the judge grappled with the documents and the commercial purpose of the Class X structure. Judgment was reserved, but given the expedited nature of the hearing, is expected in the coming weeks.


Titan Europe 2006-3 settlement put to vote

A proposed settlement of the Class X dispute for the Titan Europe 2006-3 CMBS is to be put to a vote of Class A noteholders at a meeting on 4 April 2016. The settlement proposal is that the amounts in the issuer’s collection account as at the January IPD will (after paying priority amounts and the issuer’s expenses) be shared between the Class A and the Class X noteholders in agreed proportions. Once paid the Class X noteholders will release all claims and rights and surrender their notes for cancellation.

The proposal will require an extraordinary resolution of 75% of the Class A noteholders. If the settlement is not approved the trial of the four joined Class X claims is scheduled to commence on 7 April.