Cads scores vital Eurotunnel court victory

Cadwalader Wickersham & Taft has scored a High Court victory for the bond insurer in the ongoing Eurotunnel restructuring dispute.

London litigation partner Michelle Duncan led the Cadwalader team representing the insurer MBIA Assurance, along with financial restructuring partners Tony Horspool and Andrew Wilkinson.

Duncan told The Lawyer: “We have been acting for MBIA on the Eurotunnel restructuring for the last two and a half years. MBIA has the largest single exposure to the restructuring so it was very important to them that we won the case. It was also important for the restructuring of Eurotunnel itself.”

The dispute arose when one of Eurotunnel’s fixed-link finance bondholders, the US hedge fund QVT, challenged whether Citibank, the trustee of various Eurotunnel noteholders, was bound to follow directions given to it by MBIA.

MBIA had instructed Citibank to vote in favour of the plan proposed by Eurotunnel under the French Safeguard Procedure, which offered holders of Eurotunnel’s Tier 3 debt the option to receive cash instead of convertible securities.

QVT, howver, argued that the trustee should exercise its own judgement. In a victory for MBIA, it was found that the trustee was bound to follow the insurer’s directions. The cash option is understand to have been been exercised this morning.

Citibank was advised by Denton Wilde Sapte and the team was led by litigation partner Paul Morris.

QVT was advised by Reynolds Porter Chamberlain and the team was led by litigation partner Fiona Walkinshaw.