This week saw the High Court clash between the swap provider, UBS, and the recently appointed replacement note trustee (Glas Trust Corporation) on the embattled Fairhold Securitisation. The dispute at hand centres on whether or not the ad hoc noteholders group’s fees and expenses (comprising the fees of its financial adviser and lawyers) can be recovered from the waterfall, effectively subordinating payments to the swap providers and noteholders. The financial adviser’s fees were reported to be in excess of £3.75m.

Followers of the Fairhold Securitisation saga will be aware of the wider dispute between noteholders and the swap providers, in which noteholders directed the note issuer to rescind the transaction’s swaps, on the basis that the note issuer was induced to enter into the swaps as a result of an alleged fraudulent misrepresentation made by swap providers.

Whilst the two day hearing on the advisory fees dispute has now concluded, judgement has been reserved, so a further update will be posted on this blog once judgement has been handed down. The outcome will be particularly relevant for corporate trustees, investors, financial advisers and lawyers advising in the context of capital markets restructurings and disputes.