Words Not Clear Enough To 'Wash Off' Junior Creditors

A recent case will be of interest to all those involved in negotiating the restructuring of groups of companies labouring under too much debt where there is a hierarchy of lenders.  HHY Luxembourg SARL and another v Barclays Bank plc and others arises out of the European Directories Group of companies' urgent need to restructure indebtedness in excess of €2billion.

It concerned a question that is key to determining the negotiating strength of the different categories of lenders  - arguably the second most important issue after the question of where the value breaks ( see attached) - and against the backdrop of which the terms of a consensual restructuring will be negotiated.

Namely: when enforcing at the holding company level, do the senior lenders have the ability to see that the operating companies are sold free and clear of any security, debt and guarantee claims held by any junior creditors over the shares in the operating companies and their subsidiaries and