FSHC Group Holdings v. Barclays Bank plc [2018] EWHC 1558 (Ch)

In a judgment handed down on 22 June 2018, Mr Justice Henry Carr granted rectification of two finance documents entered into by the parent company within the Four Seasons Healthcare group (the Parent) and Barclays Bank (acting as Security Agent).

Matthew Abraham of South Square was instructed by Allen & Overy as junior Counsel on behalf of the Parent.

The original private equity transaction for the purchase of the Four Seasons Health Care Group in 2012 (undertaken by Terra Firma) required the Parent to provide security over a specific loan which was part of the overall funding package. This security was not provided and in 2016, having realised the position during the course of a restructuring of the group’s debt, an attempt was made by the Parent to provide that security by way of two Accession Deeds.

Under the Accession Deeds, FSHC agreed to be bound by all of the terms of two separate security assignments entered into in 2012 which, unbeknown to the Parent, contained far more onerous obligations than required.

FSHC sought rectification of the Accession Deeds on the basis that it was the common intention of the contracting parties to provide only a limited form of security and no more. This was opposed by Barclays at least partly due to the instruction of H/2 Capital Partners (a privately-owned US based hedge fund which holds the vast majority of the relevant debt and which stood to receive a windfall if rectification was not granted).

Having heard witnesses for both the Parent, Barclays and their legal advisers, Mr Justice Henry Carr was satisfied that there was no intention on either side for the Parent to undertake the additional obligations and that the only intention was to grant the limited form of security required by the original transaction. As a result, he found that it would be inequitable not to grant rectification and so granted rectification of the deeds as sought by the Parent.

The judgment of Mr Justice Henry Carr can be found here.

Former member of Chambers Mr Justice Antony Zacaroli led Matthew until he was elevated to the Bench at the end of 2017.

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