Key Point

A distressed debt purchaser may be able to rely on misrepresentations made by the borrower to the original lender in published documents to recover loss.

The Facts

An Irish investment company ("Taberna") claimed damages for misrepresentations made by or on behalf of a large Danish bank ("Roskilde"), in investor presentation documents and annual results, which induced Taberna to enter into a secondary market purchase of subordinated notes originally issued by Roskilde.

The Decision

While the contract for the purchase of the subordinated notes was between Taberna and a third party its effect was to bring Taberna and Roskilde into a contractual relationship.  Taberna could, therefore, rely on the provisions of the Misrepresentation Act 1967.

The relevant misrepresentations were made by the Bank in public documents.  Therefore, the Bank should have expected that those representations would be available to all potential investors, including those in the secondary market.


The decision is good news for distressed debt purchasers, who may acquire debt (and suffer loss) on the basis of misrepresentations in due diligence documentation, albeit a contractual relationship with the underlying debt issuer will be required to claim damages.

Taberna Europe CDO II Plc v Selskabet (formerly Roskilde Bank A/S) (in Bankruptcy)  [2015] EWHC 871 (comm)