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ARTICLE · 13 AUGUST 2012

Investor Side Letters: Mind The Gap

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The Cayman Islands court has delivered judgment in a high-value dispute concerning the effectiveness of investor side letters and whether restructuring agreements limited an investor's redemption rights under the fund's articles.

Cayman IslandsFinance and Banking
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Medley Opportunity Fund, Ltd v. (1) Fintan Master Fund, Ltd and (2) Nautical Nominees Limited

The Cayman Islands court has delivered judgment in a high-value dispute concerning the effectiveness of investor side letters and whether restructuring agreements limited an investor's redemption rights under the fund's articles.

Fintan Master Fund Limited ("Fintan"), acting through its nominee, invested $45million in the Medley Opportunity Fund (the "Fund") in late 2007. Shortly before investing, Fintan entered into a side letter with the Fund, which granted Fintan favourable terms vis-à-vis other investors. This included a concession that when Fintan redeemed its investment, the Fund would pay the redemption proceeds immediately in cash, so far as possible.

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