UK High Court Plugs Up Creditor Waterfall Clauses

Law360, New York (October 29, 2009, 6:35 PM EDT) -- The United Kingdom's highest court ruled Thursday that the remaining assets of failed structured investment vehicle Sigma Finance Corp. should be spread equally among its creditors, a decision that participants in the case say could have a dramatic effect on so-called waterfall clauses in other bankruptcy cases.

The U.K. Supreme Court found in its first-ever ruling that Sigma's remaining assets should be distributed proportionally on a pari passu basis among all of its secured creditors, rather than on the basis of their maturities as outlined in...
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