Bear Stearns represents a costly lesson in contractual principles, says Paul Nicholls
In Bear Stearns Bank plc v Forum Global Equity Ltd [2007] EWHC 1576 (Comm), [2007] All ER (D) 103 (Jul), Mr Justice Andrew Smith gave a judgment which reaffirmed the basic legal and City principle that “my word is my bond”. The judge also demonstrated the extent to which the law seeks to uphold commercial transactions and is wary of technical attempts by parties to avoid their contracts.
The case concerned loan notes in respect of the distressed debt of an entity in the Parmalat group (the Italian group of companies that collapsed in 2003). Forum Global acquired the notes and applied to be admitted to the list of Parmalat creditors in the administration. The value of the notes lay in the dividend to be paid on the claims in the insolvency.
NEGOTIATIONS
Forum Global commenced negotiations with Bear Stearns for the sale of the notes. There were several discussions
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