Mr Justice Snowden has handed down judgment of the High Court in the much anticipated Windermere VII Class X Notes dispute.

For those of you who haven’t been following it, the dispute relates to the Windermere VII Pan European CMBS in which the holder of the Class X Notes and a holder of the Class B Notes commenced proceedings in the English High Court seeking a number declarations as to the proper construction of the transaction documents. Broadly speaking, these declarations were with respect to the basis on which payments of Class X interest had been made historically (specifically, as a result of the application of the intercreditor agreements), whether this underpayment constitutes an Event of Default and whether or not any underpayments accrue interest at the Class X Interest Rate. The holders of the Class X Notes and a holder of the Class B Notes asserted that there had been historical underpayments of Class X interest, that there had been an Event of Default and that these unpaid amounts should accrue interest at the Class X Interest Rate, which at various points in the life of the transaction had been as much as 6,001%.

The judgment can be found here.

In a nutshell, Mr Justice Snowden dismissed the Class X Noteholder’s arguments and confirmed:

I do not consider that there has been an underpayment of the Class X Interest Amount for the January 2015 or October 2015 Payment Dates, or that any further interest at the Class X Interest Rate would have accrued thereon under Condition 5(i), or that any Note Event of Default has occurred as a consequence.”

The judgment will likely be welcomed by other Noteholders in the structure and makes for interesting reading for anyone involved in CMBS or structured finance generally. Reed Smith advised the successful issuer, Windermere VII on this dispute. A further detailed analysis of the case will follow.