Fairhold says court sets aside Clifden’s admin hire under two notes

By Susanna Moon

Chicago, Aug. 13 – Fairhold Securitisation Ltd. notified holders that the court has nullified the administrative appointments under the £413.7 million of class A secured floating-rate notes due 2017 and £29.8 million of class B secured floating-rate notes due 2017.

The issuer will provide details of the ruling by the court once the order has been sealed, according to notice Monday.

Clifden IOM No.1 Ltd. reportedly made the appointments of the joint administrators to the issuer, which Fairhold then called “void and of no legal effect.”

The company said on July 20 that it had asked the High Court of Justice in London to rule invalid the appointments of John Hedger as well as Michael Bowell and Dermot Coakley as joint administrators to the issuer by Fairhold “in administration.”

The adjourned hearing had been listed for Aug. 8, with the orders issued by the court on July 20 to apply until the court ruled otherwise.

The court had ordered until further notice that Clifden refrain from taking any steps under the purported notice of appointment filed at court on July 12 and the purported notice of appointment of joint administrator dated July 18.

More details

“The statements in the announcement are inaccurate and should be ignored,” Fairhold had previously said in response to a statement by Fairhold “in administration.”

Fairhold “in administration” previously said that the “administrators have now assumed control of the issuer’s assets and will work during the administration period to maximize the outcome for all creditors of the issuer.”

Afterward, the issuer entered into a sale and purchase agreement with Fairhold Investments Ltd. to sell some receivables including the funding loans and the swaps for £402 million in cash, subject to the issuer’s right to repurchase the receivables and sell them to a third party if it receives a higher offer, according to the notice by the “in administration” issuer.

The sale agreement states that if at any time during the next six calendar months the issuer receives an offer from a third party to purchase the receivables for a purchase price of more than £402 million, the issuer will repurchase the receivables from FCIL and sell them to the party for the higher offer.

The release continued, “One of the immediate tasks of the administrators will be to undertake an investigation into the prior affairs of the issuer. This will include investigating serious allegations of material misappropriation of funds payable to the issuer under the terms of the transaction documents and impropriety in relation to the assets and rights of the issuer.”

Fairhold said the appointment was made by a director of Clifden in the “capacity as a noteholder and agent of the note trustee.”

The company cited the following reasons for the invalid appointment in the release:

• No class A note enforcement notice or class B note enforcement notice has been given by the note trustee;

• The note trustee has not appointed Clifden as its agent nor authorized it to act as its agent;

• The note trustee had no prior knowledge of nor has it in consented to the purported appointment;

• The purported administrators have confirmed that they have not consented to act as administrators of the issuer; they do not consider themselves to have been validly appointed as administrators of the issuer; and no documentation, correspondence or other communications purporting to be from the purported administrators should be relied upon in any way in relation to the issuer; and

• Despite having been requested to do so, Clifden has not provided any evidence of its status as a class A noteholder.

The issuer said that it is reserving its rights and the trustee’s rights “in relation to all matters relating to the purported appointment are reserved in all respects. The issuer intends to take immediate action to rectify any improper filings or registrations that may have been made as a consequence of the purported appointment and/or to seek other remedies.”

As announced Feb. 20, Clifden was tendering for £413.7 million of class A secured floating-rate notes due 2017 and £29.8 million of class B secured floating-rate notes due 2017 issued by Fairhold Securitisation Ltd. in order “to establish a holding” for each series of notes.

On June 4 the company said that it failed to obtain the needed tenders to establish its required holding of £104 million of the class A secured floating-rate notes due 2017.

Clifden then said it was “actively exploring certain options with a view to enabling it to reach the required holding, including acquiring notes in the secondary market on a delivery against payment basis brokered through one of the offeror’s clearing banks.”

Fairhold Securitisation is incorporated in the Cayman Islands.

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