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ARTICLE · 28 SEPTEMBER 2023

Intercreditor Distressed Disposal Provisions: Pragmatic Decision Provides Certainty For Stakeholders

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Investors in LMA-based intercreditor agreements1 (ICA) should be reassured by the commercial approach recently taken by the High Court in construing the "Distressed Disposal" provisions (DD Provisions).

United KingdomInsolvency/Bankruptcy/Re-Structuring
Sonya Van de Graaff
Sonya Van de Graaff
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Executive Summary

Investors in LMA-based intercreditor agreements1 (ICA) should be reassured by the commercial approach recently taken by the High Court in construing the "Distressed Disposal" provisions (DD Provisions).

Galapagos Bidco S.A.R.L. v Dr Frank Kebekus and others [2023] EWHC 1931 (Ch) (Galapagos) is the first judicial determination of DD Provisions in over a decade2. The decision is welcome for confirming that they do precisely what they say on the proverbial tin. Many Distressed Disposals that have been executed in accordance with "first principles" and reliance on the plain English of the DD Provisions will be safe from challenge. The decision also paves the way for confident execution of future Distressed Disposals.

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