Cases & Deals

Investment adviser's appeal to Supreme Court has dramatic impact on recovery

Clients Investment adviser

Acting on behalf of a $500 million noteholder, Jones Day took the lead in the House of Lords in successfully overturning a Court of Appeal ruling that Sigma's Receivers were obliged to distribute assets to certain creditors holding early maturing notes following an event of default, a ruling which would have led to no return for all other secured creditors who held notes maturing at a later date. The appeal was formulated on the basis that the Sigma assets should instead be distributed proportionally on a pari passu basis among all secured creditors, a construction favored by the Supreme Court.

Sigma, the first and largest structured investment vehicle, became insolvent with total liabilities in excess of $9 billion. Its assets, once valued at $27 billion, realized just $306 million at auction, crystallizing an enormous loss for its secured creditors who totaled in excess of $6 billion.