Fairhold hearing adjourned in bid to restrain Clifden as notes agent

By Susanna Moon

Chicago, Nov. 7 – Fairhold Securitisation Ltd. said the court hearing set for Nov. 6 has been adjourned regarding the case of Clifden IOM No.1 Ltd. claiming to be an authorized agent 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 return date hearing is to be listed on an urgent basis on the first available date after Nov. 26, with a time estimate of one day,” according to a notice.

Fairhold Equity Investments Ltd., Fairhold Investments Ltd., Clifden Tactical Opportunities II Ltd. and Fairhold Trust Co Ltd. were added as the “new respondents.”

Clifden, Rizwan Hussain and the new respondents must file their evidence for the application by Nov. 13, and the issuer will file its reply evidence by Nov. 20.

Clifden, Hussain and the new respondents must provide specific disclosure regarding the ownership and management of the new respondents and their relationship with Hussain.

Unless Clifden and Hussain comply with the terms of the order relating to costs, they will not be allowed to oppose the application, the notice said. They may apply to the court to “vary this order” on 24 hours’ notice to the issuer.

Clifden, Hussain and their agents or companies are restrained from taking certain steps, including those related to the affairs of the issuer, pending the return date hearing, the notice said.

As previously announced, Clifden had appointed John Hedger as well as Michael Bowell and Dermot Coakley as joint administrators to the issuer by Fairhold “in administration,” 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 the appointments invalid, which the court ordered on Aug. 10.

In the ruling, the court specified that Clifden, its representatives and Hussain are not authorized agents of the note trustee for the purposes of appointing administrators of the issuer or otherwise nor are they authorized to take any steps in the name of the issuer.

Clifden subsequently applied to appeal the order, which was denied on Oct. 16 by the Court of Appeal.

Notwithstanding the terms of the order, Clifden and other parties related to Clifden and Hussain are continuing to correspond on the assumption that acts by Bowell and Coakley “in their purported capacity as administrators are valid and effective,” the release on Oct. 31 noted.

As a result, the issuer said on Oct. 31 that it applied to the court, with support from the trustee and Bowell and Coakley, seeking further declaratory relief to restrain Clifden, Hussain and any related parties “from continuing to attempt to disrupt the affairs of the issuer and/or undermine the court’s process,” the release said.

The order also required Clifden and Hussain to pay the costs of the issuer on the indemnity basis and to make a payment of £275,000 for those costs by Sept. 7, but no payment has been received and the “issuer is actively considering the available enforcement steps.”

The court judgment given by the court was filed with the Insolvency Service.

The court had previously ruled that any action taken by Bowell, Coakley or Hedger in their purported role as administrators of the issuer “are void and of no effect.”

The court also ordered injunctions against Clifden, its agents and Hussain from taking any steps related to the purported notice of appointment filed with the court on July 12 and the purported notice of appointment of joint administrator on July 18.

More details

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.”

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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