FL-2025-000012 - [2025] EWHC 2673 (Ch)

The Bondholder, as defined in the Additional Agreement (as amended), is FV Debt, and the Agent is Aether. There is no reference to successors in title or interest.

However, clause 16 now provides that the Bondholder may assign or transfer any of its rights under the Additional Agreement to another entity, without the need for any consent from the parties, if it is assigning or transferring any of its rights “under and in accordance with the terms of the Subscription Agreements”.

Mr Craig submitted, by reference to the speech of Lord Browne-Wilkinson in Linden Gardens Trust Ltd v Lenesta Sludge Disposal Ltd [1994] 1 AC 85 at p.108F, that on the true interpretation of the Amendment Agreement there could be no valid assignment of FV Debt’s contractual rights under that Agreement unless the specified conditions for a valid transfer were complied with, and Ms Boase (rightly) did not dissent from that proposition.

Accordingly, since there is no challenge otherwise to the assignment of the benefit of the Amendment Agreement, the issue is whether FV Debt (itself a valid assignee of the rights of Regera under both Subscription Agreements) transferred to the Claimant its rights under and in accordance with the two Subscription Agreements.

The Subscription Agreements are governed by French law, but there is no plea that French law differs in any material respect from English law so far as interpretation of the agreements is concerned. Although in his skeleton argument Mr Craig did suggest that effect should be given to the Tribunal de Commerce exclusive jurisdiction clauses in the Subscription Agreements and Transfer Agreements, so that only that court can decide who was the Bondholder under those Agreements, it was not a point that he pursued in oral argument.

The Additional Agreement, like the Standstill Agreement, incorporates the meanings of defined terms in the terms and conditions of the Subscription Agreements. In view of that, and the fact that the Additional Agreement and the Amendment Agreements are governed by English law and have exclusive jurisdiction agreements in favour of the courts of England, it seems to me that the parties to the Additional Agreement and the Amendment Agreements must be taken implicitly to have agreed that the English courts have jurisdiction to decide: (a) any question as to the meaning of terms of the Subscription Agreements, as necessary for them to determine the meaning of the Agreements governed by English law, and (b) as a consequence of clause 16 of the Additional Agreement (as amended), any issue that it is necessary to decide in order to decide whether the benefit of the Additional Agreement was lawfully assigned to the Claimant. The centre of gravity of this claim is undoubtedly the Additional Agreement, not the Subscription Agreements. It is not a commercially sensible intention to impute to the parties that a dispute under clause 16 of the Additional Agreement could not be resolved without adjourning for parallel proceedings in Paris to resolve a part of the same dispute: see BNP Paribas SA v Trattamento Rifuti Metropolitana SpA [2019] EWCA Civ 768; [2020] 1 All ER 762 at [65]-[68], per Hamblen LJ.

The relevant provisions of the Parent (T2) Subscription Agreement are the following, so far as material:

The terms of the Company (T1) Subscription Agreement are materially identical and do not need to be set out here. The same arguments and conclusions apply to both Subscription Agreements.

FV Debt as Bondholder was entitled to transfer the Bonds under each Subscription Agreement to the Claimant and to do so without the Issuers’ consent (a) because the Claimant was at the time of the transfer one of Regera’s Affiliated Entities and (b) because an Event of Default had occurred (non-payment) and was continuing, and the Claimant was not an Industry Competitor, as defined. The effectiveness of the transfer was dependent on compliance with clause 7.5 and the execution of all documents required in that clause, including in particular a Transfer Agreement.

“Transfer Agreement" is defined in the terms and conditions of the Bonds, in Schedule 3 to the Subscription Agreements, as meaning:

“… an agreement substantially in the form set out in Schedule C (Form of Transfer Agreement) or any other form agreed between the Administrative Agent and the Issuer.” (underlining added)

Schedule C is a form of transfer agreement which states that it is made between four parties: the Issuer, the Administrative Agent, the Transferor Bondholder and the Transferee Bondholder. It provides for the transfer of an identified number of bonds on a specified date, and ancillary matters. By the use of square brackets in paragraph (f)(ii), it provides some alternative confirmations of the status of the Transferee Bondholder, so far as the payment of interest and fees is concerned. The form ends with space for signature on behalf of each of the four parties.

“Bondholder” is defined in the terms and conditions of the Bonds as meaning:

“… from time to time, the person whose name appears on the Bonds Register as holder of that Bond, and ‘Bondholders’ means all or any of them as the context may require.”

“Bonds Register” is defined as having the meaning ascribed in clause 2.3, which states:

“(a)

The Issuer shall at all times keep at its registered office, a register (the ‘Bonds Register’) showing:

(i)

the Bonds issuance as at the Issue Date;

(ii)

all transfers, redemptions and changes of ownership in respect of the Bonds occurring after the Issue Date; and

(iii)

the names and addresses of the Bondholders.

(b)

The Issuer shall make the Bonds Register readily available to the Bondholders (or to any person authorized by any of them) for inspection and for the taking of copies of it.”

The Defendant’s argument is simple: the two Transfer Agreements, which purported to transfer the bonds from FV Debt to the Claimant, were not substantially in the form set out in Schedule C, because the Parent and the Company were not parties to them, as Issuers, nor were they signed on behalf of them, and no other form was agreed by either Issuer. Accordingly, the conditions for the effective transfer of the Bonds under clause 7.2(a)(ii) of the Subscription Agreements have not been satisfied and transfer of the Bonds was ineffective in law. That means that there could be no valid assignment of the rights of FV Debt in the Additional Agreement, as the condition for assignment of such rights was not met, and so the Claimant is neither “the Bondholder” nor entitled to sue on clause 5 of the Additional Agreement.

The Claimant’s answer to that argument is two-fold:

In my judgment, the Claimant is wrong on the first point but right on the second point.

In view of (a) the definitions of “Bondholder” and “Bonds Register” in the terms and conditions of the Subscription Agreements and (b) the state of the Bonds Register in the custody of each Issuer, the Claimant is the Bondholder for the purposes of the Subscription Agreements. However, the “Bondholder” as defined in the Additional Agreement is FV Debt. The identity of the Bondholder is not in any event the relevant question under clause 16 of the Additional Agreement, as amended, which is whether the condition for assignment by FV Debt as Bondholder under the Additional Agreement was met. The condition was assignment or transfer of FV Debt’s rights or obligations “under, and in accordance with the terms of, the Subscription Agreements”. That depends on whether the transfer to the Claimant satisfied the conditions in clause 7 of the Subscription Agreement, the relevant one of which was the execution of a Transfer Agreement, not on whether the Claimant was the “Bondholder” as defined by it.

On the “substantially” point, Ms Boase sought to rely on the fact that the transfers from Regera to FV Debt similarly did not include the Issuers as parties, but nonetheless the transfers were registered by both Issuers in the Bonds Registers. Further, the identity of FV Debt as Bondholder was conclusively affirmed by the terms of the Standstill Agreement and the Additional Agreement, and the Claimant has been registered as Bondholder. While the conduct of the parties after the date of the contract is not relevant to the interpretation of the contract, these facts are some evidence that there was nothing substantially missing from the form of the Transfer Agreements that caused any problem for the Issuers. The Claimant also notes that the Defendant does not maintain in the Paris Proceedings that the transfers to the Claimant were ineffective for want of a valid Transfer Agreement.

Ms Boase argued that in Schedule C, although the Issuer is identified as a party, it has no role under the terms of the Transfer Agreement, nor does it take any benefit or burden of the other terms that are agreed, or make or receive any assurance or acknowledgment. It was therefore only necessary or appropriate for the Issuer to be a party where the general rule on transfer applied and the Issuer’s consent was required. Signing the Transfer Agreement conclusively records the Issuer’s agreement to the transfer. But where such consent is not required – because the transferee is an affiliate or because an event of default had occurred and is continuing – no purpose is served by the Issuer being a party to the Transfer Agreement.

On this, Mr Craig sought to argue that the Subscription Agreements distinguished between the Issuer’s “prior consent” to a proposed transfer (clause 7.1(a)), without which the matter could not proceed to documentation and completion, and the Issuer’s agreement to the Transfer Agreement itself, which was always required, even if, as here, the Bondholder could transfer as of right. I do not consider that that is what is meant by “prior consent”. It signifies only that consent is needed prior to the transfer taking effect. If the Issuer did sign the Transfer Agreement, it could not argue that it had not given its prior consent. If, as the Defendant suggests, consent to the terms of the transfer was required even in a case where prior consent was not needed, the benefit of being able to transfer the bonds without consent would have been illusory, as the Issuer could always desist from signing the Transfer Agreement.

As for the form of the Transfer Agreements that FV Debt, the Claimant and Aether executed, Mr Craig made two points on the content of Schedule C that he said supported a conclusion that the Issuer had to be a party. First, the square brackets in paragraph (f)(ii) show that the parties gave thought to where alternatives might be appropriate, but they did not so indicate in relation to the presence of the Issuer as a party. Second, the ability of Aether and the Issuer to agree on a different form means that without the agreement of the Issuer there could not be a different version of the form in Schedule C.

I do not accept those arguments. The alternatives in paragraph (f)(ii) relate to the identity and tax status of the transferee, so they serve a particular purpose in terms of providing information that the Issuer and Agent needed to have. This does not mean that the parties gave prior thought to all potential alternatives to the wording or content of Schedule C. While the parties to the Subscription Agreements could have used square brackets to indicate that in some cases the Issuer need not be a party, the fact that they did not do so is not conclusive of the question.

As to the ability to use a different form with the consent of the Issuer, this does not assist on the meaning of “substantially in the same form set out in Schedule C”. FV Debt, the Claimant and Aether did not need to agree a different form with the Issuers if the form that they used was substantially the same as Schedule C.

Mr Craig referred to Venture North Sea Gas Ltd v Nuon Exploration & Production UK Ltd [2010] EWHC 204 (Comm), a decision of Gross J, on the question of whether a joint operating agreement was in substantially the form of a draft agreement required by a share purchase agreement. He said that the comparison was one to be made overall: do the differences amount to material changes having regard to the agreement as a whole, and having regard to its intended contractual effect. That was a case in which the parties were to enter into an executory agreement, and so the effect of the contract, in terms of its performance, was accepted to be of importance.

Other authorities exist on the meaning of “substantially in the form of”, or cognate expressions such as “a form to substantially the same effect”, which are found in many statutory instruments that prescribe forms of notice, in other areas of law. See, e.g., Panayi v Roberts (1993) 25 HLR 421 and Sabella Ltd v Montgomery [1998] 1 EGLR 65, where the question was whether omitted or wrong information, where it was the purpose of the form to convey information, meant that the notice given was not substantially to the same effect.

In the context of Schedule C, the form in question is primarily transactional, being an agreement to sell and buy bonds, but also serves to record the fact of the transfer, provide information about the transferee, and regulate the position in terms of rights and obligations as between transferor and transferee. Those are distinct functions of the form and a form that did not effectively perform those functions would not be substantially in the form of Schedule C. Putting it into my own words, the question of whether the Transfer Agreements that were executed were substantially in the form specified requires an assessment of whether the changes impaired in any material way the functions that the form was intended to perform. That is to be determined by comparing the two versions, identifying to what extent the omitted or changed content affected those purposes, and if so in what ways, and then deciding whether, overall, despite the omissions or changes, the Transfer Agreements were in substance as effective for its purposes as the terms of Schedule C.

The only change relied on is the omission of the Issuer as a party. Its omission had no impact whatsoever on the sale and purchase, or the particulars or terms of the transfer that were recorded, or the rights and obligations between the transferor and transferee. The information that the Transfer Agreements recorded and provided was unaffected.

The omission of the Issuer could only materially affect the transfer if either its consent to the transfer was required or if it had to be a party in order to agree the terms, or take the benefit of matters agreed. I have already explained that consent to the transfer was not required. None of the terms of Schedule C are agreements by, with or for the benefit of the Issuer. Mr Craig argued that the burden under a contract cannot be assigned without the agreement of the party to whom the obligation is owed, and that that was the purpose of the Issuer being a party. However, there is no attempt in Schedule C to remove the burden of any obligations owed to the Issuer by the transferor and to transfer them to the transferee.

The transfer that takes place is defined in clause 7.5(c) of the Subscription Agreements (set out above) and takes effect to the extent specified in Schedule C. As a consequence of the transfer, the transferee agrees to become a party to the Subscription Agreement, as well as accede to the Intercreditor Agreement. It is therefore wrong to say that the transfer of obligations that the Bondholder owes to the Issuer depends on the Issuer being a party to the Transfer Agreement. Rather, the transfer is completed, pursuant to the terms of the Subscription Agreement, when the ordre de mouvement de titres is provided to the Issuer by the Administrative Agent and the Issuer registers the transferee as Bondholder, which it agrees by clause 7.6 of the Subscription Agreement to do.

The Defendant has not relied on any provision of French law to the contrary.

Accordingly, I reject the argument that the Issuer needed to be a party to the Transfer Agreement in order to transfer the burden of the Subscription Agreements to the Claimant. One would have thought that if that was understood to be the case, objection (or at least a question) would have been raised upon the transfers to FV Debt and to the Claimant before they were each registered by the Company and the Parent, but that did not happen.

I can discern no respect in which the Transfer Agreements, as executed, were less effective or informative than a Schedule C transfer executed by the Issuer too would have been. The Transfer Agreements as executed were therefore substantially in the form of Schedule C even though the Company and the Parent did not execute them.

There was therefore a valid transfer to the Claimant of rights and/or obligations under, and in accordance with the terms of, the Subscription Agreements, within the meaning of clause 16 of the Additional Agreement, as amended, and the transfer to the Claimant of the benefit of the Additional Agreement without consent was accordingly valid and effective. As from 26 February 2025, the Claimant had the benefit of the Company Parties’ obligations under clause 5 of the Additional Agreement and was able by these proceedings to enforce them.