Boies, Schiller & Flexner obtains judgment for holders of FCC notes
April 16, 2015
Boies, Schiller & Flexner’s London office successfully obtained a judgment from the English High Court on April 16, 2015, in favor of a group of holders of debt issued by Spanish conglomerate Fomento de Construcciones y Contratas, S.A. (FCC).
By its judgment, the Court issued a declaration that an Event of Default had occurred under the terms of €450 million of 6.50 percent unsecured convertible notes issued by FCC, which were governed by English law and subject to the jurisdiction of the English Courts. Boies, Schiller & Flexner also obtained an order that its clients’ costs in bringing the claim be paid by FCC.
The Event of Default had been triggered by actions taken by FCC to write off principal, reduce interest rates and extend the maturity of €1.35 billion in syndicated debt that was advanced to FCC under the terms of a syndicated financing agreement. This “cram-down” was being sought under a Spanish insolvency law process called “homologation”, intended to be used to rescue ailing companies by allowing amendment of the terms of debt documents without meeting contractual thresholds. FCC took the action, which was extremely detrimental to creditors, despite recently having raised around €1bn in new equity.
Together with specialist local counsel, Boies, Schiller & Flexner is challenging the attempted cram-down on behalf of its clients, who are holders of both the notes and the syndicated loan, before the Spanish Courts. The firm also took steps before the English Courts in respect of the Event of Default under the notes. In the English proceedings, FCC challenged both the substance of the claim and the jurisdiction of the English Courts, arguing that the clients did not have sufficient interest. These challenges, some of which were considered at interim hearings, were all rejected by the Court in favor of the firm’s clients. FCC also sought to delay the outcome of the proceedings, but Boies, Schiller & Flexner obtained the favorable substantive judgment for its clients only three months after proceedings were issued.
The case is being led by London Managing Partner Natasha Harrison, assisted by associates Fiona Huntriss, Melissa Kelley and Ross McCartney.