CL-2025-000062 - [2025] EWHC 1506 (Comm)

It was submitted that damages are not an adequate remedy for the Bondholders (and also Elara). The underpinning for this is largely Eraaya’s financial position. There appears to be little doubt that Eraaya is not well resourced. It frankly admits that it is “unable to repay the VLL Loan”, which is in the sum of US$34.83m plus interest (i.e. not much less than the quantum of the Unutilised Proceeds). It also positively asserts that the VLL loan was the only one it was able to get – and if so, its terms reflect a considerable lack of confidence in Eraaya as a going concern.

The proceeds themselves are obviously not (substantially) destined to be held as an asset of the company. One of the reasons for the relief being sought is Eraaya’s desire (and it would say, obligation) to pay a considerable portion of the Unutilised Proceeds to VLL.

It follows that the evidence is clear that Eraaya could not pay any damages award made against it. Eraaya’s principal asset is Ebix’s shares, but those shares should be subject to the Collateral so cannot be used to pay any damages award. Further the value of the shares depends on the value of Ebix.

It follows that even if there is no proprietary claim by the Bondholders so long as there is a potential claim for damages that has some impact on balance of convenience as well as on joinder.

But certainly if the Bondholders succeed at trial in establishing that they have a proprietary right to the Unutilised Proceeds, either by an existing trust (express or Quistclose) or a retrospective trust arising upon rescission, they will be forced to seek damages from Eraaya because they will very likely be unable to recover their equitable property. VLL is an Indian-based company with seemingly no ties to the jurisdiction, and so recovering the Unutilised Proceeds from VLL would present considerable difficulties.

It follows that there is a very real case that the Bondholders (and Elara) would suffer serious and irremediable prejudice if the Court wrongly grants the relief sought.