Cheyne v TMF Trustee: High Court stays Hunkemöller noteholder claim pending New York litigation

The High Court has stayed an English claim brought by a group of noteholders against the security agent and parent company of European lingerie retailer Hunkemöller, finding that parallel proceedings already under way in New York created too great a risk of inconsistent judgements to allow both cases to proceed simultaneously.

Handing down judgement in Cheyne European Special Situations Fund Investments SCA & Others v TMF Trustee Limited & Another [2026] EWHC 2091 (Ch), Mr Justice Leech granted a case management stay of the entire English claim until the New York Supreme Court has determined the related proceedings at first instance, while giving both sides liberty to apply if circumstances change.

The claim arose from a 2024 debt restructuring in which Redwood Capital Management injected new funding into the financially distressed Hunkemöller group in exchange for elevating, or "up-tiering", its holding of senior secured notes above those held by other creditors, including the claimant funds. When Hunkemöller subsequently defaulted in March 2025, the security agent, acting on Redwood's instructions, transferred the group's shares and secured debt to a Redwood vehicle for consideration the claimants say left them with nothing.

The claimant funds, who together held a significant minority of the original notes, had already commenced proceedings in New York in November 2024 challenging the validity of the up-tiering transaction as a breach of the notes' governing indenture. After the March 2025 enforcement action, they issued a second, separate claim in London under the intercreditor agreement, arguing that the instructions given to the security agent were invalid because Redwood lacked the required majority and, alternatively, that Redwood had abused its position as majority creditor in breach of an implied term derived from the principle established in Assénagon Asset Management v Irish Bank Resolution Corporation.

Mr Justice Leech accepted that the correct test, following the Court of Appeal's guidance in Athena Capital Fund SICAV-FIS v Secretariat of State for the Holy See, was simply whether a stay served the interests of justice, rather than requiring "rare and compelling" circumstances in every case. He found a real risk of inconsistent findings on the up-tiering issue, since the English and New York claims relied on the same alleged breaches of the indenture, and any New York judgement on that question was likely to bind the parties by issue estoppel.

The claimants had argued that their separate allegation of abuse of majority power under the intercreditor agreement could proceed in England regardless of the New York outcome. The judge disagreed, concluding that both claims turned on overlapping valuation evidence concerning whether the secured notes had any economic value at the time of enforcement, a question that could not sensibly be separated from the validity of the up-tiering transaction itself.

The judgement also examined whether the claimants, who were not parties to the intercreditor agreement, could rely on its exclusive jurisdiction clause. Applying the "no look through" principle established in Secure Capital SA v Credit Suisse AG, the court held that the claimants' interests were held through a chain of custodial sub-trusts and did not make them registered noteholders entitled to enforce the agreement directly, rejecting that limb of their case.

Weighing the advanced stage of the New York litigation, in which discovery and depositions had already concluded, against the prejudice of further delay to the claimants, the judge concluded the balance favoured a stay, while confirming any extension pending a New York appeal would require a fresh application.