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

The first issue in this expedited trial comes down to this, as a matter of contractual interpretation: did the Defendant agree not to challenge any subsequent enforcement of security upon an admitted event of default in return for being granted further time in which to seek to re-finance its subsidiaries’ debts?

A second issue is whether the Claimant stands in its predecessor’s shoes for the purposes of the relevant contracts, so that it is entitled to enforce the agreement not to challenge enforcement and maintain this claim.

If the Claimant succeeds on both issues then, by issuing the proceedings that it has before the Tribunal de Commerce in Paris (“the Paris Proceedings”), seeking to stay or reverse the enforcement action that has been taken, the Defendant is in breach of contract, and there is a question of what relief this Court should grant the Claimant.

The Claimant seeks a declaration that the Defendant has acted in breach of contract and an injunction requiring it to withdraw the Paris Proceedings. By agreement, the Paris Proceedings have been adjourned until November to enable this claim to be determined first.

It is common ground that it is unnecessary to decide any question of substantive French law, either because none is pleaded to be relevant to the issues raised by the Claimant in this claim, or because (in relation to the interpretation of contracts governed by French law) no party contends that French law is materially different from English law.

Ms Anna Boase KC and Ms Joyce Arnold appeared for the Claimant and Mr Nicholas Craig KC appeared for the Defendant. I am grateful to them for their lucid and helpful submissions and to all the legal teams for the impeccable way that the documentation and other materials to assist the court were prepared.

The Claimant, a company incorporated in Luxembourg, is the assignee of the interest and rights of FV Debt Holding S.à R.L. (“FV Debt”) in bonds issued by two companies, Hotel de Mandelieu La Napoule S.à.S. (“the Company”) and its parent, Poséïdon Hospitality S.à R.L. (“the Parent”). The shares in the Parent were held prior to 28 May 2025 by the Defendant as to 50% and by Financière Luminaire S.à R.L. (“FL”) as to 50%.

FV Debt was itself the assignee (and an affiliate) of the original subscriber and bondholder, Regera S.à R.L. (“Regera”). The Subscription Agreements are governed by French law, with exclusive jurisdiction clauses in favour of the Tribunal de Commerce de Paris, and they include the terms and conditions of the bonds, at Schedule 3 to the Subscription Agreements. The maturity date of all the bonds was 6 September 2024.

As part of the original financing transaction on 7 March 2023, security for the debt of the Company and the Parent under the bonds was provided by the Parent and Defendant respectively, including in the following form:

On the same date, the Company, the Parent, Regera, the Defendant, FL and Aether entered into an Intercreditor Agreement, which is governed by English law.

The bonds became immediately due and payable on 6 September 2024 but were not repaid. This was an event of default under the terms of the bonds. Aether on behalf of itself, Regera and FV Debt formally reserved their rights by letter dated 12 September 2024 but allowed the Company and the Parent further time to refinance.

Two months later, on 11 November 2024, the Company, the Parent, the Defendant, Aether and FV Debt entered into two further written agreements, governed by English law, that are the relevant contracts to be interpreted for the first issue:

It is common ground that the two written agreements are in substance a single agreement concluded on 11 November 2024 and fall to be construed together.

The Standstill Agreement was made initially for a maximum period of 3 weeks, ending on 2 December 2024, but it provided that the standstill period could be extended by agreement. That date came and went but the bonds were not repaid.

On 16 January 2025, the parties to the Standstill Agreement and the Additional Agreement entered into two Amendment Agreements (governed by English law), amending the terms of each of those principal agreements and providing that each principal agreement and the Amendment Agreement should be read and construed as one document. They extended the period of the standstill to 31 January 2025.

I will return shortly to the central terms of these Agreements.

On 19 February 2025, FV Debt, the Claimant and Aether entered into two Transfer Agreements, by which the bonds (in default) were to be transferred to the Claimant, which at that time was an affiliate of Regera, and so the bonds could be and were transferred without the consent of the Issuers. The Parent and the Company were not parties to the Transfer Agreements. Written notice of the transfers was given to the Company, the Parent, the Defendant and Aether on the same day.

Also, on the same day, the Claimant executed a creditor accession agreement, by which it acceded to the terms of the Intercreditor Agreement, and an accession to the Fiducie. Pursuant to the notice given, the Company and the Parent each registered the Claimant as the bondholder in the Bonds Register that, under the terms and conditions of the bonds (set out later in this judgment), the Issuer was required to keep.

The standstill period (which had been further extended) expired on 14 March 2025 but the Claimant forbore to enforce its rights.

On 7 May 2025, the ultimate owners of Regera, FV Debt and the Claimant sold the Claimant to Azure Riviera Lending, LLC (“Azure”).

On 13 May 2025, Aether sent letters to the Company, the Parent and the Defendant reserving the finance parties’ rights and confirming that the Claimant was prepared to forbear to enforce its rights until 23 May 2025, with no expectation of further delay.

On 27 May 2025, Aether issued a demand notice, declaring all sums under the bonds to be due (though this was strictly unnecessary) and requiring payment by 10 am on 28 May 2025. When payment was not made, Aether, acting on the instructions of the Claimant under the Intercreditor Agreement, issued a notice of enforcement, giving notice that the Lux Share Pledge and the Lux Receivables Pledge had been enforced. The shares in the Parent were appropriated to the Claimant and immediately sold to Seaside Serenity Holding B.V. (“Seaside”), a company in the same group as Azure.

Aether also gave notice to Aloe, on behalf of the Claimant, that a Triggering Event had occurred under the Fiducie and, exercising its voting rights to the shares of the Company, Aloe wrote to Mr Kadi dismissing him as President of the Company with immediate effect and appointing Mr Burgio as replacement.

In response, the Defendant swiftly entered a request at the Tribunal de Commerce for authority to issue an urgent summons against Aloe, Aether, Azure and Seaside. On receipt of authority to issue, the Defendant started the Paris Proceedings against those respondents and served a summons on Aloe for a hearing on 12 June 2025.

Before that hearing took place, the Claimant obtained an order in the High Court from Richard Smith J ordering the Defendant to take all steps within its power to obtain an adjournment of the Paris Proceedings. The Defendant did not comply with that order, but the Paris Proceedings were adjourned, despite its oral argument that they should be heard that day.

On 26 June 2025, upon the Defendant agreeing to seek an adjournment of the next hearing date in Paris, I accepted an undertaking from it to take all steps within its power to pursue an adjournment of that hearing date, and I ordered an expedited trial of the matters that are now before me.

Again, the Defendant did not comply with its undertaking, and the Claimant was forced to return to this court to seek an order that the Defendant write to the Tribunal de Commerce in specified terms, seeking an adjournment. Following an order of Thompsell J on 1 July 2025, the letter was finally written, and on 3 July 2025 the Paris Proceedings were adjourned to 12 November 2025.

In the Paris Proceedings, the Defendant complains that the demand notice of 27 May 2025 was hurried, disproportionate and contradictory and in breach of the obligation of good faith; that it was issued by an agent (Aether) on behalf of the Claimant which was no longer the holder of the receivables; that notification of a Triggering Event under the Fiducie was unlawful, and so realisation by Aloe under the Fiducie was also unlawful and should be suspended, among other allegations.

The relief sought by the Defendant in the Paris Proceedings is:

As such, the Paris Proceedings were plainly a challenge to the entitlement of the Claimant to have enforced its security and to the validity of the particular steps by way of enforcement taken at its direction. The Claimant contends that the Paris Proceedings were a breach of the terms of the Additional Agreement, as amended by the Amendment Agreement. The Defendant disputes that, on its true construction, these Agreements prevented it from challenging, in the correct jurisdiction, the validity of enforcement action taken by the Claimant after 11 November 2024.

I set out below the terms of the Standstill Agreement, the Additional Agreement and the Amendment Agreement that are most material to this question of interpretation.