Banca Generali S.p.A v Sovereign Credit Opportunities SA & Anor

Following a trigger event in a securitisation, noteholders may direct the issuer to exercise a contractual power to remove and replace a fiscal agent where that direction concerns the management and administration of the securitised receivables. A detailed contractual regime governing agent removal does not, without clear words, exclude a separate post-trigger direction power. The fiscal agent’s expanded post-trigger powers may overlap with those of the collection agent. However, a calculation agent whose function is principally to prepare payment calculations is not thereby engaged in managing or administering the receivables, so the direction power cannot be used to require its replacement.

The claimant, a senior noteholder, brought a CPR Part 8 claim concerning three trade-receivables securitisations that had passed their final maturity dates without full redemption. Following trigger notices, the claimant directed the issuer to remove and replace the fiscal agent and calculation agent in two schemes, and sought to convene a noteholders’ meeting to consider equivalent directions in the third.

The issuer and its fiscal and calculation agent disputed the validity of those directions. The central questions were whether the contractual agent-removal provisions prevented use of the post-trigger direction power, and whether replacing each agent was action in relation to the management and administration of the receivables.

1. Construction. The court applied the ordinary principles of contractual interpretation, seeking the objective meaning of the language used. The agent-removal provisions did not constitute an exhaustive code excluding the post-trigger power to direct the issuer. No such restriction appeared in the wording, and an inference from omission was insufficient.
2. Fiscal Agent. Following a trigger notice, the fiscal agent’s powers were materially expanded. They included taking action on behalf of the issuer to protect the interests of the issuer, noteholders and other creditors in respect of the receivables. Those powers potentially involved their management and administration. The continued appointment of the collection agent did not prevent the fiscal agent, or the issuer, from exercising overlapping powers. A direction to remove and appoint a fiscal agent therefore fell within Condition 12.1 and the corresponding intercreditor provisions.
3. Calculation Agent. The calculation agent’s principal function was to prepare the Payments Report. Although that work related to recoveries from the receivables, the court distinguished activity relating to recoveries from activity constituting management or administration of the receivables. Replacing the calculation agent was outside the scope of the direction power.
4. Disposition. The Organisation of Noteholders was entitled to direct removal and replacement of the fiscal agent. The directions given for TFII and TFIII were valid for that purpose. The notices convening the TFI noteholders’ meeting were also valid as regards the fiscal agent. The court did not determine that the direction power authorised replacement of the calculation agent.