HC-2017-001662 FSHC Group Holdings Limited v Barclays Bank Plc

Terra Firma has successfully obtained rectification of the terms of a private equity financing transaction completed in 2012, concerning the Four Seasons care homes business.

The transaction required the Parent company to provide security over a particular shareholder loan which was part of the overall funding package. Having belatedly spotted, in 2016, that the relevant security documentation had either never been provided or could not now be located, an attempt was made by the Parent to provide that security by way of two Accession Deeds. By a mistake, far more onerous obligations were undertaken by the Parent than were required.

The Parent sought rectification of the Accession Deeds, but this was opposed by Barclays Bank as the security agent, on the instructions (at least primarily) of H/2 Capital Partners, a privately-owned US based hedge fund which holds the vast majority of the relevant debt.

Mr Justice Henry Carr ordered that the Accession Deeds be rectified. Having heard witnesses for both the Parent and Barclays, he was satisfied that there was no intention on either side for the Parent to undertake the additional obligations; the intention was only to make good the missing security over the shareholder loan. It would therefore be inequitable not to rectify the Accession Deeds. The Parent’s claim for rectification therefore succeeded.

The judgment of Mr Justice Henry Carr can be found here.

David Wolfson QC was instructed by Allen & Overy to represent the Parent.