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

The Bondholders have put forward their case on three bases: express trust, Quistclose trust and bare trust post rescission. The Bondholders’ case is that all or most of the Unutilised Proceeds are held on trust for their benefit (or at least for the benefit of Selvi). There are three possible trusts: (1) an express trust by which GLAS holds the Unutilised Proceeds for the Bondholders as beneficial owners, subject to a power to pay the funds to Eraaya upon Elara’s confirmation; (2) a Quistclose trust either (i) by which GLAS holds the Unutilised Proceeds for the Bondholders as beneficial owners, subject to a power to pay the funds to Eraaya upon Elara’s confirmation or (ii) by which GLAS holds the Unutilised Proceeds for the Bondholders as beneficial owners, subject to a power to apply them exclusively “towards the acquisition of 100% Equity of Ebix Inc”, or otherwise to apply the funds in accordance with the Bondholders’ consent; and (3) a bare constructive trust that will arise following rescission but will take effect retrospectively, such that GLAS will be deemed to hold the Unutilised Proceeds for the Bondholders as beneficial owners as from the date that the Bondholders paid over those monies.

The principles were not contentious, save as to details which can sensibly be addressed as part of the analysis.

The starting point however may be said to be this: if one asks whether the parties’ intentions (as ascertained from the terms of the arrangement and overall circumstances of the case) were that the Unutilised Proceeds were to be at GLAS’ free disposal, it follows from the arguability of the account given in the evidence that it is also arguable that they did not. There is a case that all of Selvi, Elara and Eraaya understood that the Unutilised Proceeds were not to be at GLAS’ free disposal.

This point was not really disputed. However, for Eraaya Mr Head conducted a thorough and very clear-sighted forensic review of the constituent parts of the proposed trust case, designed to establish that any trust case would inevitably fall down at some point in the analysis.