Yieldpoint Stable Value Fund, Lp v Quintar Kimura Special Credit Fund Limited

When a contract requires a hypothetical open-market valuation at a specified date, the asset must be valued as it then existed. The valuation should reflect the effect a reasonable purchaser would give to future possibilities known or assessable at that date, without hindsight.

Where an unusual asset has no realistic third-party market and the contractual redemption party is effectively the only purchaser, that party’s informed, contemporaneous assessments may be important evidence of market value. They are not automatically conclusive and must be tested against the other evidence. Default and deteriorating creditworthiness should be reflected, while uncertain recovery prospects should be assessed as they stood at the valuation date.

This was a trial of Yieldpoint’s claim against Quintar Kimura for the market value of a one-year participation in a loan to Minera Tres Valles SPA. Earlier proceedings determined that the participation expired on 31 March 2022 and that, because the borrower had defaulted, Kimura had to pay its fair market value rather than repay the principal at par. The Court of Appeal had rejected an unpleaded market-value claim without fresh evidence in [2024] EWCA Civ 639. Yieldpoint then brought this claim on fresh evidence. The sole remaining issues were the participation’s value at maturity and whether Kimura breached its payment obligation.

1. Claim succeeded. The participation’s fair market value at 31 March 2022 was USD 3,115,000. Kimura was in breach by failing to pay that sum on the maturity date. Interest was agreed to run from that date at the contractual rate; the court reserved the calculations and consequential orders for further submissions.
2. Valuation date and reality principle. The contract did not prescribe a valuation method. The court therefore valued the expired participation rights as at 31 March 2022, applying the reality principle: a hypothetical sale does not permit departure from the asset’s actual circumstances beyond what is needed to make the hypothesis work. A purchaser assesses future possibilities as they appear at the valuation date; later events cannot be treated as then-known facts. The court applied the approach discussed in JPMorgan International Finance Ltd v Werealize.com Ltd [2025] EWCA Civ 57 and noted the Supreme Court’s description of the reality principle as fundamental in Secretary of State for Transport v Curzon Park Ltd [2023] UKSC 30.
3. Evidence of value. There was no realistic market for this unusual, short-term participation. Kimura was the redemption party and effectively the market of one. Its contemporaneous assessments were important because it was well informed about the borrower and had regulatory and reporting obligations. The court accepted that accounting value and market value are not identical, but found that the expected-credit-loss assessments were relevant evidence and could not be ignored. The court also applied the principle that a particular purchaser’s higher valuation may determine open-market value, discussed in JPMorgan at [68]–[69].
4. Application to the evidence. The court preferred Ms Wall’s valuation evidence. It found that Mr Johnson’s near-zero valuation gave insufficient weight to contemporaneous restructuring and funding efforts and was affected by hindsight. It was too soon at maturity to treat liquidation as inevitable. But par value was also inappropriate because the borrower was in default and its creditworthiness had deteriorated. The court selected the lowest figure in Ms Wall’s range, USD 3,115,000, based on the loss-given-default measure in Kimura’s solvency spreadsheets, and considered that figure reasonably supported by the recovery-rate evidence.

1. Court of Appeal — In the earlier construction proceedings, the court reversed the first-instance decision that Kimura had an unconditional obligation to repay the USD 5 million principal at maturity: [2024] EWCA Civ 639 .
2. High Court — The earlier first-instance decision concerned construction of the participation agreement: [2023] EWHC 1212 (Comm) . The Court of Appeal rejected an alternative market-value claim without fresh evidence. Yieldpoint then brought the present claim, which was tried on fresh evidence.