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

I have referred already to the recital which explains that the “acknowledgments and undertakings” in this Agreement are given in consideration for the accommodations provided by FV Debt and Aether in the Standstill Agreement.

Clause 4, headed “Creditworthiness”, states that:

“The Company Parties [the Company, the Parent and the Defendant] agree and acknowledge that the Parent and the Company:

(a)

failed to redeem the Bonds on their respective Maturity Dates and therefore that Events of Default are continuing under (among others) clause 21.1 (Non-Payment) of the T1 Terms and Conditions and clause 20.1 (Non-Payment) of the T2 Terms and Conditions;

(b)

have suspended making payments on certain of their debts, including in relation to the Bonds; and

(c)

but for the terms of the Standstill Agreement and unless the Bonds are redeemed in full prior to the termination of the Standstill Agreement, are unable to pay their debts as they fall due, including in relation to the Bonds.”

As under the Standstill Agreement, capitalised terms have the same meaning as in the Intercreditor Agreement.

It is not disputed that this important clause creates, and is intended to create, a contractual estoppel in relation to the past and continuing events of default, the current inability of the Company and the Parent to pay their debts as they fall due, and (unless full redemption takes place before the end of the standstill period) their future inability to pay their debts as they fall due. Notably, therefore, though an event of default under the bonds already existed, the Additional Agreement confers a further right on FV Debt and Aether in the event that that full redemption does not take place, namely the agreed occurrence of a Luxembourg Security Enforcement Event, as defined in the Intercreditor Agreement, being the insolvency of the Company and the Parent.

To explain that, clause 10 of the Intercreditor Agreement entitles the majority senior creditors, in the event of any Transaction Security becoming enforceable in accordance with its terms, to instruct Aether to enforce or refrain from enforcing as they see fit, however, clause 10(b) states:

“Notwithstanding paragraph (a) above, the Instructing Group shall refrain from instructing the Security Agent to enforce a Luxembourg Transaction Security unless any Luxembourg Security Enforcement Event has occurred and is continuing.”

Clause 4(c) of the Additional Agreement therefore gave FV Debt and Aether the immediate right, once the standstill period had expired without the bonds having been redeemed in full, to enforce under the Lux Share Pledge and the Lux Receivables Pledge against the Parent, not just against the Company, and effectively admitted that right.

The Defendant does not dispute that that is the effect of clause 4 of the Additional Agreement.

Clause 5 of the Additional Agreement is headed “Co-operation regarding Enforcement Action”. Enforcement Action is a defined term and includes making a demand and, most relevantly, the taking of any steps to enforce or require the enforcement of any Transaction Security. Clause 5 provides:

“Subject to the terms of the Standstill Agreement, the Company Parties:

a.

undertake to co-operate fully with the Bondholder and the Agent in relation to any Enforcement Action they may wish to take at any time (including without limitation any preparatory steps they may wish to take while the Standstill Agreement is in force);

b.

agree and acknowledge that the Agent (acting on the instructions of the Instructing Group) may enforce or refrain from enforcing any Transaction Security as the Instructing Group sees fit, including as regards the sequencing of any enforcement steps in respect of any particular secured asset and any decision to enforce part but not all of the security created under any given Security Document;

c.

agree and acknowledge that if the Agent (acting on the instructions of the Instructing Group) chooses, at its entire discretion, to enforce the first ranking Luxembourg law governed share pledge agreement dated 7 March 2023 over the shares in the Parent (the Lux Share Pledge) and/or the first ranking Luxembourg law governed receivables pledge agreement dated 7 March 2023 over all receivables owed by the Parent to Unik and Luminare (the Lux Receivables Pledge), it may take the following approach when appointing the "Expert" under clause 8(b) of each of the Lux Share Pledge and the Lux Receivables Pledge:

i.

to seek indications from CBRE France, Cushman & Wakefield France and Jones Lang LaSalle SAS (the Specified Real Estate Firms) whether they will be able to provide an independent valuation of the relevant Shares or Receivables (as defined in the Lux Share Pledge and the Lux Receivables Pledge respectively) that are the subject of Enforcement Action or, in the alternative, whether they will be able to provide an independent valuation of the underlying real estate assets held by the Company; and

ii.

if none of the Specified Real Estate Firms is able to provide an independent valuation of the relevant assets that are the subject of Enforcement Action, to appoint an independent auditor (reviseur d'entreprises), a reputable investment bank or a sales agent, in each case in its sole discretion, as the "Expert" with a Specified Real Estate Firm (or, if no Specified Real Estate Firm is able and willing to assist, such other valuation firm as the Agent may select in its sole discretion) providing an independent valuation of the underlying real estate assets held by the Company to inform the valuation of the Shares or Receivables (as the case may be); and

d.

agree and acknowledge that no Company Party shall contest, or seek to contest or otherwise prevent, the validity of, or exercise by the Agent of its rights under, any Finance Document, including any Security Document, including, without limitation, the approach to the appointment of the "Expert" under the Lux Share Pledge and/or the Lux Receivables Pledge set out in paragraph (c) above, and the Company Parties hereby irrevocably release any rights or claims they may have now or in the future in this regard.”

……….

Clause 6 of the Additional Agreement is headed “Exercise of rights under security documents”. It provides:

“The Company Parties agree and acknowledge (including without limitation for the purposes   of clause 3.1 (Standstill) of the Standstill Agreement) that:

a.

because Events of Default are continuing, the Agent (as Pledgee under the Lux Share Pledge) is entitled to exercise, at its entire discretion, the voting rights in relation to the Shares in any manner it deems fit for the purpose of protecting and/or enforcing its rights under the Lux Share Pledge;

b.

notwithstanding the terms of the Standstill Agreement, the Agent (on the instructions of the Instructing Group) may wish, during the Standstill Period or otherwise, to exercise the voting rights in relation to the Shares to protect its rights;

c.

no Company Party shall contest, or seek to contest or otherwise prevent, the exercise by the Agent of the voting rights in relation to the Shares in accordance with the terms of the Lux Share Pledge and the Company Parties hereby irrevocably release any rights or claims they may have now or in the future in this regard;

d.

the Agent (as Pledgee under the Lux Share Pledge) may (during the Standstill Period or otherwise) enforce the security it holds in respect of the Shares exclusively held by Financiere Luminare S.a r.l. in the Parent (the Luminare Shares) only at any time following the occurrence of an Event of Default which is continuing; and

e.

the Pledgors (as defined in each of the Lux Share Pledge and the Lux Receivables Pledge) have irrevocably waived any right of recourse, right, action and claim that they may have, whether by way of subrogation or directly or of any other nature, against any Obligor and all or any of the direct and indirect subsidiaries of such Obligor, further to an enforcement of the relevant security by any means whatsoever.”

It is notable (and, the Defendant submits, significant) that clause 5(a) is expressed as an undertaking to do something, namely to cooperate, in relation to future Enforcement Action, as defined. Clauses 5(b), (c) and (d), by contrast, are expressed as agreements and acknowledgements, rather than as undertakings; though clause 5(d) contains two parts: first, an agreement and acknowledgement that the Company Parties (the Company, the Parent and the Defendant) will not do certain things in future, including contesting or preventing the exercise of Aether’s security rights; and second, a release of existing or future rights “in that regard”. Which “regard” is being referred to in that second part of clause 5(d) is an important matter in dispute.

All the contents of clause 5 are expressed to be subject to the terms of the Standstill Agreement, i.e. to the extent that the terms of the Standstill Agreement cut across the obligations or agreements in clause 5, these are qualified, to that extent only. However, clause 5(a) nevertheless requires the Company Parties to cooperate to a limited extent even during the standstill period.

Clause 6, in contrast, contains matters agreed and acknowledged by the Company Parties for the purposes of the Standstill Agreement as well as the Additional Agreement, and include specific rights that FV Debt could exercise either during the standstill period or at any time, notwithstanding the Standstill Agreement. It also contains a waiver by the Defendant of rights of recourse against the Company and the Parent in consequence of any enforcement of its security.

Clause 11 of the Additional Agreement states that:

“Subject to the terms of this Agreement, the Finance Documents remain in full force and effect.”

Clauses 15 and 16, as inserted by the Amendment Agreement, state:

“15.

Unless otherwise provided in this Agreement, a person who is not a Party to this Agreement may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999.

16.

If the Bondholder is assigning or transferring any of its rights or obligations under, and in accordance with the terms of, the Subscription Agreements, to another entity, the Bondholder and/or the Agent may assign or transfer (including by way of novation) any of its rights and/or obligations under this Agreement to such entity without the need for any consent from the Parties.”