(In the matter of Sigma Finance Corporation (in Administrative Receivership)
8 December 2008 – Leading international law firm Mayer Brown has successfully represented a secured creditor of the largest ever SIV, Sigma Finance, which collapsed at the beginning of October this year with Receivers being appointed shortly after.

Mayer Brown represented their client in relation to a dispute as to the correct interpretation of a Security Trust Deed (“STD”) which governs the rights of secured creditors to payment following the SIV’s collapse. The dispute concerned secured creditors' rights to payment during an initial period of 60 days, defined in the STD as the “Realisation Period”. The Receivers applied to the High Court for directions and invited interested creditors to assist the Court by arguing for contrary interpretations of the STD.

Mayer Brown’s client holds medium term notes which were due to be paid by Sigma during October 2008. Mayer Brown argued that the STD required creditors to be paid in full on their due dates during the Realisation Period in priority to later maturing creditors. Three other creditors argued that once the SIV had collapsed, the STD required the assets of Sigma Finance to be shared out pro-rata between some or all of the creditors regardless of their maturity dates.

Following a first instance hearing on 4 November, Mr Justice Sales agreed with Mayer Brown's interpretation of the STD. That decision was then appealed in a hearing which took place on 20 November. In the Court of Appeal, Lord Justice Lloyd and Lord Justice Rimer dismissed the appeals with Lord Neuberger of Abbotsbury dissenting. Due to privacy restrictions the judgments of Mr Justice Sales and the Court of Appeal have not been available for publication before now.

Former Mayer Brown litigation partner Simon Willis said: “We are obviously pleased that the Court of Appeal has upheld our interpretation of the contract. It was to our client's advantage that our litigators were able to work in conjunction with our structured finance team whose intimate knowledge of the mechanics and contractual architecture of SIVs added real value as we prepared our case in the limited time available.”

Mayer Brown's knowledge of the structured finance market comes from the breadth and depth of its experience in this area. This is the most recent in a long line of instructions for Mayer Brown in relation to the establishment and restructuring of SIVs. These include Cheyne Finance, Rhinebridge, Whistlejacket, Golden Key, K2, Carrera Capital Finance Limited and the Master-Liquidity Enhancement Conduit (MLEC), among others.

Mayer Brown instructed Mr Mark Howard QC and Mr Jonathan Dawid of Brick Court Chambers.

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