Simon Duncan reports on contractual agreements in the Supreme Court
Re Sigma Finance Corporation (in administrative receivership) and in Re The Insolvency Act 1986 (Conjoined Appeals) [2009] UKSC 2 was the first of a series of cases to spring from the recent banking crisis to reach the Supreme Court. Sigma was a structured investment vehicle. Its business involved acquiring asset-backed securities using funds raised from medium term notes, repurchase contracts and capital notes inter alia.
All of Sigma’s assets were secured in favour of its secured creditors by way of a security trust deed made between Sigma and Deutsche Trustee Company Limited as security trustee. The deed was governed by English law. When the banking crisis adversely affected the value of Sigma’s assets it was unable to meet its liabilities to its funders and Sigma entered into an insolvent liquidation. The trustee appointed receivers in accordance with the terms of the trust deed. The receivers were obliged to establish a short term pool to cover liabilities falling due within one year amongst others. It is in the context of this arrangement
