The importance of careful drafting and spens clauses in finance documentation

The importance of careful drafting and spens clauses in finance documentation

What did the Commercial Court decide in Canary Wharf Finance plc v Deutsche Trustee Company Ltd? Emma Millington, solicitor in the Lexis®PSL Banking & Finance team, considers the recent decision by the Commercial Court as to whether a prepayment was a mandatory prepayment or voluntary prepayment under the terms and conditions of mortgage-backed debentures and whether a premium was payable to the Noteholders as a result.

Original news

Canary Wharf Finance plc v Deutsche Trustee Company Ltd [2016] EWHC 100 (Comm)

The Commercial Court were asked to construe a clause in the terms and conditions of mortgage-backed debentures (the Notes), which the claimant (the Issuer), a special purpose company in the Canary Wharf Group (the CW Group), had issued, pursuant to the securitisation of the CW Group's real estate portfolio. The Noteholders argued that the redemption of the Notes was an optional redemption under the relevant terms and conditions, with the result that the Issuer had to pay a premium to the Noteholders whereas the Issuer argued that the redemption was mandatory, meaning that a premium was not payable. The court held in favour of the Noteholders.

What is the background to the case?

The Issuer issued the Notes pursuant to a securitisation of the CW Group's real estate portfolio. The Notes were issued under a trust deed between the Issuer and the first defendant (the Trustee). The original trust deed was dated 6 June 2000 but the latest version was 23 April 2007, having been amended and restated as further Notes had been issued. The Issuer had lent the sums raised by issuing the Notes to another special purpose company in the CW Group (the Borrower) pursuant to an Intercompany Loan Agreement (the ICLA). The date of the original ICLA was also 6 June 2000, but the latest version was dated 17 June 2014. The ICLA was secured by charges over the CW Group's properties.

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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.