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DC Decision 9 September 2019
EMEA DC Statement 9 September 2019
The EMEA DC previously resolved not to hold an Auction in respect of Top Gun Realisations 61 Limited as there are no Deliverable Obligations. Therefore, CDS Transactions would normally be settled through the Fallback Settlement Method. However, in practice as there are no Deliverable Obligations, it is also not possible to settle such Transactions through the Fallback Settlement Method.
The EMEA DC understands that the resulting operational difficulties involved in settlement of Transactions referencing Top Gun Realisations 61 Limited was discussed by ISDA’s Credit Market Infrastructure Working Group (including the impact of the upcoming September CDS roll date). The EMEA DC understands that members of that group were in favour of the EMEA DC holding a deemed Auction. Therefore, in light of the operational difficulties and the September CDS roll date, the EMEA DC is of the view that the simplest and most efficient course of action is to reverse its previous decision not to hold an Auction and instead have a deemed Auction in respect of standard credit derivative transactions referencing Top Gun Realisations 61 Limited. The deemed Auction will take place on 11 September 2019 and the Auction Final Price will be 100 per cent. (i.e. such that the Auction Settlement Amount is 0).
The form of the Auction Settlement Terms for the deemed Auction will be published separately prior to the Auction Date.
EMEA DC Statement 3 September 2019
The EMEA DC met on 3 September 2019 and resolved that a Bankruptcy Credit Event had occurred with respect to Top Gun Realisations 61 Limited (the Reference Entity) under both the 2014 Transactions and the Updated 2003 Transactions.
According to a notification of written resolutions filed at Companies House by the Reference Entity, on 6 August 2019, the sole shareholder passed a Special Resolution to wind up the Reference Entity. The EMEA DC’s discussions focused on whether the adoption of the Special Resolution constituted the Bankruptcy Credit Event described in Section 4.2(e) of the 2014 Definitions and Section 4.2(e) of the Updated 2003 Definitions.
Section 4.2(e) of the 2014 Definitions/Updated 2003 Definitions provides that a Bankruptcy Credit Event occurs with respect to the Reference Entity if the Reference Entity "has a resolution passed for its winding up[, official management] or liquidation (other than pursuant to a consolidation, amalgamation or merger)". Note that the reference to official management only appears in Section 4.2(e) of the Updated 2003 Definitions but, in any event, is not pertinent for present purposes.
The EMEA DC considered its previous statement in respect of ONO Finance II Public Limited Company dated 6 November 2015 (the ONO Statement). Consistent with the approach set out in the ONO Statement, the EMEA DC concluded that there was no evidence that the Reference Entity was being wound up pursuant to a consolidation, amalgamation or merger and, in that respect, it was similar to the ABB International Finance Limited fact pattern (which is also described in the ONO Statement). Therefore, as with ABB, the carve-out was not applicable and a Bankruptcy Credit Event had occurred with respect to the Reference Entity.
According to the Publicly Available Information, the Reference Entity has no debt outstanding so the EMEA DC concluded it would not be appropriate to hold an Auction.
Note: The DC Secretary published the above Meeting Statement on 3 September 2019 in which it was stated that it would not be appropriate to hold an Auction as, according to the Publicly Available Information, the Reference Entity has no debt outstanding. The DC Secretary also published the resolution of the EMEA DC not to hold an Auction. Accordingly, no Auction Settlement Terms will be published and the No Auction Announcement Date was 3 September 2019.
Further Note: The DC Resolution to not hold an Auction referred to above was reversed by the EMEA DC on 9 September 2019. Please see the DC Statement dated 9 September 2019 above for more information.
Request Accepted by DC
Pending DC Consent