Case Law Update: Consent Solicitations, Consent Payments and Oppression of the Minority

The legality of exit consents, used widely in the bond markets in the context of liability management exercises, has been examined for the first time under English law.  In Assénagon Asset Management S.A. v Irish Bank Resolution Corporation Limited, the High Court upheld a challenge to the legality of an exit consent on the basis that it was oppressive towards the minority bondholders.  The court reiterated the principle that majority power must be exercised bona fide in the best interests of all bondholders and not in a manner which is oppressive or otherwise unfair to the minority. 

In a separate case, Sergio Barreiros Azevedo v Imcopa Importacao, Exportaacao e Industria de Oleos Limitada [2012] EWHC 1849 , the High Court considered the use of consent payments, also commonly used in liability management exercises, and found them to be lawful and not in the nature of a bribe.  To read our more detailed briefing on both cases, click here.