Redwood Master Fund Ltd (and 5 others) v. TD Bank Europe (and 2 others)
In a recent case brought before the English courts Redwood Master Fund Ltd (RMF) and others, being a tiny minority in the syndicate, alleged that the decision of the majority of the syndicate lenders to waive the borrower’s default was unfair to the minority lenders.
In this case the facility agent, TD Bank Europe Ltd (TD), was authorised to represent the majority of lenders in the syndicate.
When the borrower, UPC Distribution Holding BV (UPC), encountered difficulties involving a financial restructuring, TD agreed to a variation of the facility agreement that waived certain provisions of the agreement and allowed UPC to draw solely on RMF. RMF maintained this exposed them to unfair exposure to risk that removed an equivalent risk from the other lenders and challenged the validity of the waiver as a misuse of power by the majority.
