This case is a reminder of how extensive a secured creditor’s rights can be in respect of the charged property, even before the right to enforce arises.
It is also the first time that the English Court of Appeal has analysed the rights of parties to a securitisation. The decision, based on documents that are typical in the market, shows that certain parties to a securitisation (namely the Trustee and Insurer) can have a wide discretion to make what is in effect a commercial decision. In this instance, they were able to change the nature of the underlying security from convertible debt to cash.
This case is one of the many to have been brought following the approval by the Paris Commercial Court (on 15 January 2007) of Eurotunnel’s restructuring plan. It concerned Eurotunnel’s so‑called "Tier 3" debt which, under the plan, was to be exchanged for new convertible loan notes or, alternatively, a cash payment. The dispute was triggered by a complaint by one of the noteholders, QVT
