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14 Mar 2008

SIV To Pay Creditors In Full

Justice Etherton has ruled that structured investment vehicle (SIV), Whistlejacket, must pay off creditors that were due to be paid on the day it declared insolvency.

A statement on the ruling was issued, detailing how different holders of debt issued by Whistlejacket would be paid. The court ruled that holders of Whistlejacket U.S. medium-term notes, due to be redeemed on February 15 on the same date as the insolvency notice, should be paid the amount due in full.

The obligation to repay them "occurred prior to the occurrence of the Insolvency Redemption Event and therefore did not fall to be redeemed on the Insolvency Redemption Date," the statement said.

The decision may have some impact on how creditors of other troubled vehicles, such as Cheyne Finance, set up by hedge fund Cheyne Capital Management, and Rhinebridge Plc, set up by German bank IKB will be paid.

Deloitte & Touche was appointed as receiver of Whistlejacket on February 12 after a drop in the value of the SIVs assets led its sponsor, Standard Chartered, to shelve a plan to rescue it by providing liquidity. The SIV was declared insolvent on February 15.