Striking out parts of a swaps claim (Ventra Investments v Bank of Scotland)

Striking out parts of a swaps claim (Ventra Investments v Bank of Scotland)

A recent decision discusses whether aspects of a claim relating to the purchase of replacement interest rate swaps could be struck out.

Original news

Ventra Investments Limited (in creditors voluntary liquidation) v Bank of Scotland plc [2017] EWHC 199 (Comm)

Ventra purchased four replacement interest rate swaps from The Bank of Scotland (BOS). Ventra alleged that it was induced to enter into these trades by alleged negligent and fraudulent misrepresentations or negligent misstatements and negligent failure to provide an adequate explanation of the nature and effect of the swaps. BOS sought to have parts of Ventra's particulars of claim struck out.

What are the practical implications of this case?

This case is important for derivatives practitioners in setting out another instance whereby derivative transactions are alleged to have been inappropriately sold. In addition, it highlighted the issue of striking out aspects of the particulars of claim that were deemed immaterial, and considered when the court is likely to do this, as opposed to permitting the defaulting party to amend its particulars.

What was this case about?

Background to the case

Prior to the events giving rise to the claim, Ventra operated a successful property investment and letting business. As of February 2008, the value of the portfolio was in excess of £86m. When it entered into administrative receivership on 16 May 2011, Ventra owned some 99 properties and was indebted to BOS in the amount of almost £94m. Ventra is now in liquidation.

BOS began providing lending services to Ventra in 1997 and between 2004-2008 made available ten loan facilities.

In connection with these facilities, Ventra entered into a number of interest rate swaps with BOS. These original trades were replaced between 2008 and 2009.

Ventra's claim

Ventra's main claims were:

  • that it was induced to enter into the replacement trades by BOS making negligent misrepresentations to the effect that

there was significant value in the original trades that could only be accessed if Ventra embedded that value in the replacement trades, and

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About the author:

Meet Emma:

1.Banking and finance lawyer with experience in derivatives, debt capital markets, securitisation and structured finance in London and Paris

2.Likes ballet, playing the harp and holidays

3.Thinks the law is always changing!

Emma trained and qualified at Allen & Overy LLP and worked in their derivatives and structured finance teams in London and Paris.  She then joined the foreign exchange prime brokerage legal team at Deutsche Bank before spending 4 ½ years with Crédit Agricole CIB advising the fixed income and derivatives desk.