Triumph Of The Disclaimer - A Case Study

1. Introduction

A lesson has been set down for banks and financial institutions by the High Court in Barclays Bank Plc v Grant Thornton UK LLP[2015] EWHC320 (Comm) – beware relying on audited accounts prepared for the purpose of financial covenant testing.

On 12 February 2015, the High Court granted summary judgment in favour of Grant Thornton UK LLP ("Grant Thornton"), dismissing a claim against it by Barclays Bank plc ("Barclays")for damages in connection with losses suffered by Barclays from the collapse of hotel giant Von Essen Hotel Group ("VEH").

2. Background

On 11 August 2006, VEH Group entered into a Facility Agreement with Barclays and Lloyds for loans in an aggregate amount of £250 million. Under that agreement, VEH made a number of covenants about its financial condition to be verified, at particular times during the course of the facility through the provision of periodic financial information and certificates.