[2025] EWHC 1930 (Comm)

Cedar Mundi is a Lebanese company formed to operate a closed-end venture capital fund investing in Lebanese tech start-ups. Cedar Mundi’s investor/shareholders were the Fourth Defendant (“MABIL”) and eleven Lebanese banks. The banks are known as the “C-331 Shareholders”, because their participation in Cedar Mundi took place under Circular 331 issued by the Lebanese Central Bank (“the BdL”).

MABIL is part of a group, owned by the Kuwaiti Al Bahar family of whom the Second Defendant (“Mr Al Bahar”) is a member. The First Defendant (“Mr Attieh”) was one of Cedar Mundi’s directors.

Société Générale de Banque au Liban (“SGBL”) acts as the lead C-331 shareholder and sat (and still sits) on Cedar Mundi’s board. Cedar Mundi currently has no known employees. Its board comprises SGBL itself, an SGBL employee (a Mr Saghbini) and four other C-331 Shareholder banks. (Footnote: ¹) Cedar Mundi’s lawyers take their instructions from SGBL.

Under subordinated credit facilities, MABIL and the C-331 Shareholders contributed capital to Cedar Mundi following two capital calls in 2016 and 2017. In March 2019, Cedar Mundi made a third capital call. MABIL paid in full, but all but one of the C-331 Shareholders did not.

From August 2019, Lebanon experienced a financial crisis marked by a shortage of foreign currency. Lebanese banks ceased to honour instructions to transfer foreign currency abroad. The Lebanese Pound devalued substantially against the US Dollar. Cedar Mundi admits that it had difficulties accessing US Dollars transferable outside Lebanon. The Lebanese financial crisis and its impact on depositors’ ability to transfer funds out of Lebanon has been well chronicled by judges in this court: see for example Picken J’s summary of the crisis in Manoukian v SGBL & Bank Audi [2022] EWHC 669 (QB) at [19]-[25], and Bitar v Bank of Beirut [2022] EWHC 2163 (QB).

In December 2019, the C-331 Shareholders paid part of the third capital call. All but one bank paid in Lebanese Pounds and not US Dollars. The Defendants’ case is that, as a result, the C-331 Shareholders defaulted under their subordinated credit facilities and risked Cedar Mundi declaring a default and (ultimately) compelling a sale of their interests. The C-331 Shareholders (through Cedar Mundi) dispute that there was such a default.

Against that backdrop, in March 2020 Mr Attieh caused Cedar Mundi to enter into a Portfolio Preservation and Continuity Agreement (“the PPC Agreement”) which involved the transfer of some of Cedar Mundi’s portfolio to the Third Defendant (“IFAC”) in return for Cedar Mundi acquiring an interest in IFAC. IFAC is part of the IFA Group, in which the Al Bahar family have a minority interest.

Mr Attieh’s object was to facilitate the provision of US Dollar funding to the portfolio, given that little was forthcoming from the C-331 Shareholders. Cedar Mundi’s case in these proceedings is that the PPC Agreement was unauthorised and part of a fraud on Cedar Mundi perpetrated by the First to Fourth Defendants, although the loss and damage appears yet to be identified and quantified. It is the Defendants’ case that there was none, and that after a trust instrument was signed Cedar Mundi became the sole beneficial owner of IFAC.

The Defendants allege that by August 2020 it was clear that Cedar Mundi’s fund was no longer sustainable. The C-331 Shareholders could or would not contribute further capital in freely transferable US Dollars. Mr Attieh and SGBL began discussions about the terms of an exit for the investors. In February 2021, the Al Bahar group offered to purchase most of Cedar Mundi’s portfolio for US$ 27 million. The terms of a sale transaction were negotiated in March and April 2021. The proposed buyer was the Fifth Defendant (“Cedar II”), a Cayman entity formed for the purpose, to which MABIL and other investors contributed capital.

On 13 April 2021, Cedar Mundi’s board unanimously voted to approve Mr Attieh concluding on Cedar Mundi’s behalf a sale on certain terms set out in resolutions. The proposed sale included a term, proposed by SGBL, permitting an upwards adjustment in the consideration if, within a certain period, an SGBL-appointed valuer found that the value of the portfolio assets was more than 10% above the price.

It is common ground that SGBL never appointed such a valuer and that those board resolutions were never ratified by shareholders at a general assembly.

On 28 June 2021, Cedar Mundi (through Mr Attieh) and Cedar II entered into an English law sale and purchase agreement (“the SPA”), under which Cedar Mundi sold to Cedar II certain portfolio assets comprising shares and other investments, and its interest in IFAC. The consideration was payable partly in cash and partly by setting-off the price against sums owed by Cedar Mundi to MABIL, which debts had been assigned as part of the transaction to Cedar II.

As for the cash consideration, Cedar II paid about US$16.6m into Cedar Mundi’s account with BEMO Bank in Lebanon. The US$27m consideration was revised down to some US$25.6m in September 2021, because Cedar Mundi had been unable to procure the transfer of its interests in three Lebanese entities. Save for those, title to the shares and other interests was transferred and (where registrable) registered in Cedar II’s name.

After the conclusion of the transaction in September 2021, Mr Attieh (and others) resigned from Cedar Mundi’s board.

On 25 October 2021, the C-331 Shareholders elected what is now its current board. At the same time, that board resolved (in a board resolution) that the SPA was invalid and that the transfer of assets to Cedar II was unlawful and irregular.

The Defendants all contest that resolution, and say that the C-331 Shareholders had all agreed to the deal reflected in the SPA, and now simply seek to renege on it. They reject Cedar Mundi’s allegations of fraud.