Buyer properly unwinds trade as deadline expires (VR Global Partners LP v Exotix Partners LLP)

Buyer properly unwinds trade as deadline expires (VR Global Partners LP v Exotix Partners LLP)

This case considers the ability of a buyer of a loan participation to insist upon unwinding the transaction where the deadline for meeting a condition to the sale expires. The case examines the extent of the buyer’s obligation to act in good faith and assist the other parties in meeting the deadline.

Original news

VR Global Partners, L.P. v Exotix Partners LLP

 [2017] EWHC 2620 (Comm)

Why is the case of interest?

The case considered the ability of a buyer to trigger a provision to unwind a trade where:

  • a deadline for obtaining a registration certificate from a central bank had passed, and
  • the market had moved against the traded portion of the debt making it commercially advantageous for the buyer to exit the trade

VR Global Partners, L.P. v Exotix Partners LLP discusses the extent to which one party to a trade can insist that a deadline is extended or force another party to take steps leading to the satisfaction of condition precedent to the sale.

The case also considered how the Loan Market Association’s (LMA) standard terms which applied to the trade interacted with the special conditions agreed between the parties.

What were the facts?

CVI sold a $US 10m portion of its participation in a loan to Exotix. Exotix sold this on to VR Global (VR).

The sale was made subject to a condition that the National Bank of Ukraine issued an amendment or supplement to a registration certificate relating to the transfer (the NBU Registration Condition).

The parties agreed conditions to cover this situation which were as follows:

14(6) The parties agree and acknowledge that if proof of NBU Registration has not been received by 30th November 2014 then this trade may be unwound at [VR's] option in the manner set out in the following paragraph. [CVI, Exotix and VR] may, on or before 30th November 2014, review the situation

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About the author:

Meet Neil:

1. Banking and finance lawyer with particular experience in asset finance

2. Likes Wales, wine, sport and anything else that means he doesn’t have the time to have to write personal information about himself

3. Thinks the law is a far broader topic than any of his family and friends who do not work in law

Neil specialises in banking and asset finance transactions with a particular emphasis in finance for shipping, aviation and renewable energy, as well as providing corporate transactional support. He trained and qualified at TLT LLP and spent a further four years working as a finance solicitor, acting for borrowers and lenders before joining the Asset Finance team at DLA Piper (UK) LLP.