Bond Consent Solicitation Payments - Court of Appeal Upholds Judgment in Azevedo & Another v Imcopa

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In summer 2012, two important judgments were handed down on cases relating to bond consent solicitations. Although the consent solicitation techniques proposed by the debtor companies in each case were markedly different, at issue in both cases was how companies, which are seeking to amend their bond terms, can lawfully incentivise their bondholders to vote in favour of proposed amendments to the relevant bonds. Given the continuing need for many companies with bonds in their capital structure to amend those bonds as a result of the ongoing ‘Great Recession’, and in light of increased levels of bond issuances in recent years, the two judgments and a recent Court of Appeal decision will be viewed with great interest by debtors and creditors alike. Many bonds issued by international companies and foreign sovereigns are governed by English law and these judgments are therefore likely to have world-wide ramifications.

On 22 April 2013 the Court of Appeal upheld the judgment of Hamblen J in Azevedo and Another v Importacao, Exportaacao E Industria De Oleos Ltda and others [2012] EWHC 1849 (Comm). The decision also confirmed that an appeal against the High Court’s judgment in the second consent solicitation case, Assenagon Asset Management S.A. v Irish Bank Resolution Corporation (formerly Anglo Irish Bank Corporation Ltd) [2012] EWHC 2090 (Ch), will not be pursued. The High Court judgment in Assenagon therefore remains good law.

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