434. Re Sigma Finance Corp [2009] UKSC 2

Interpretation – split decision on meaning of “so far as possible” in document regulating realization and the payment of assets in informal winding up

 The Facts

The “Security Trust Deed” of a “Structured Investment Vehicle” provided that during the realization period the security trustee should “so far as possible” discharge on the due dates therefor any short term liabilities falling due for payment during such period, using cash or other realizable or maturing assets of the issuer (the SIV).

A single short term liability which became due during the realization period exceeded all realizable assets.

Literal application of the quoted provision would result in one secured creditor being paid in full and all the other (substantial) secured creditors receiving nothing. 

The most prominent interpretations were:-

  1. the  literal interpretation;
  2. that the directive to pay short term liabilities when they fell due, qualified by the expression “so far as possible”, meant taking into account the imperative found elsewhere in the document to share the assets among the creditors, pro rata.

Findings

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