Banking Litigation Podcast EP58: Monthly Update – January/February 2026

And I'm going to kick us off today with an interesting decision, EMIS and ICU trading, which in the spirit of the season offers a timely reminder that precision and clarity are key to avoiding relationship breakdowns, I think, in banking litigation and in life generally.

So this is the case about the note holders trying to replace the trustee under a series of loan participation notes, right? Against the wishes of the issuer?

Yes, and before I delve into this, this is something we're seeing an awful lot more of.

I've advised myself on a few matters recently involving that.

I think it's a growing trend in the market.

Yes, there we are, trend.

But in this case, Kerry, the ultimate borrower of the funds raised via the notes had defaulted on its loan obligations and the issuer in turn defaulted.

But the existing trustee felt unable to act because of sanctions concerns relating to the borrower.

Presumably frustrated by the deadlock, the note holders attempted to remove and appoint a new trustee via a consent solicitation process seeking a set of extraordinary resolutions.

The issuer then applied for a prohibitory injunction to stop the note holders from taking further action and declaratory relief from the court.

So the question for the court was whether the note holders had the right to remove and replace the existing trustee?

Exactly, and this obviously turned on the transaction documents.

Now the High Court focused on the documentation and made two key findings.

First, that only the issuer had the power to appoint a trustee, and secondly, although the note holders could remove a trustee, that removal only became effective once a new trustee was appointed by the issuer or by the court.

This sounds like the note holders attempt basically failed on a question of contractual construction.

Bingo.

Yes, you're absolutely right, Jonah.

And so you may wonder why I'm covering this one, given that it is so fact specific.

But we're seeing an increasing trend, as I mentioned earlier on, of note holders and bond holders becoming more proactive in this space.

and more litigious, especially in an environment of economic uncertainty and distressed debt.

So I suspect that it's an interesting illustration of this trend.

And the case also provides an example of how the court is willing to deal with these issues relatively expeditiously.

The relevant resolutions of the note holders in this case were passed in July of last year and the court handed down judgment on it was a Part 8 claim during December, so only a lag of five months.

So this year's Valentine's takeaway could be that relationships may be messy, but trust deeds definitely should not be.

Yes, and to talk about cases close to your heart.