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IN THE MATTER OF SIGMA FINANCE CORPORATION (IN ADMINSTRATION)

The court construed a clause dealing with the distribution of assets in a security trust deed entered into by a structured investment vehicle.

10 November 2009

The appellant interested parties appealed against a decision of the Court of Appeal ((2008) EWCA Civ 1303, (2009) BCC 393) on the interpretation of a security trust deed entered into by a structured investment vehicle (S) with a view to securing its assets in favour of secured creditors. S's business was investing in asset-backed securities and other financial instruments. It issued or guaranteed loan notes to finance its activities. Most of the holders of notes were secured creditors under the security trust deed. S ran into financial difficulties and one of its liquidity providers gave notice of an event of default under its facility agreement. As a result, an "enforcement event" occurred and the floating charge created under the deed crystallised. The security trustee appointed receivers pursuant to the deed. The deed did not accelerate any obligations on enforcement. Under clause 7 of the deed the trustee had a 60-day realisation period in which to realise or deal with S's asset...

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