Relevant Documents:
Codere May 17 Skeleton Argument on Summary JudgmentCodere May 17 Skeleton Argument on Jurisdiction
Perella Weinberg and Codere made submissions to an English court today over whether a lawsuit started in Spain by the Spanish gaming company against the U.S. financial advisor should be heard in the United Kindom instead. The case stems from a disagreement over whether Codere owes restructuring fees of more than $10 million to Perella for advisory services performed while the company restructured its debt between 2014 and 2015.
Codere claims Perella and its advisors stopped providing services in February 2014, leaving the company to negotiate directly with bondholders and shareholders. It therefore refuses to pay additional money and success bonuses to the advisor.
This morning, Mr. Justice Paul Walker heard arguments about the jurisdictional issues. The judge will decide on the matter this afternoon.
According to Codere’s skeleton argument, the company hired Perella in 2013 as it specifically wished to gain the services of Derron Slonecker, a senior partner at Perella who had relationships with creditor representative as he worked for Houlihan Lokey in the past. Codere’s bondholders were advised by Houlihan’s Manuel Martinez Fidalgo.
Perella’s contract provided for a monthly advisory fee, a bonus tied to the successful restructuring of Codere’s bank debt and a €10 million bonus tied to the success of the restructuring of the rest of Codere’s obligations. The company also submitted that it paid for Slonecker and his team's travel and lodging expenses up to €50,000 a month. The executive from New York would spend several days a week in Alcobendas, Spain, for his job.
In February 2014, before any debt restructuring deal could be signed, Slonecker and Perella abandoned their responsibilities under the contract, Codere argues. They stopped participating in creditor meetings, communicating proposals to creditors and negotiating with them. Slonecker ceased communicating by mail or phone and eventually left Perella.
The resignation of Slonecker and other Perella partners in the United States is part of a wider dispute inside the advisory firm, according to reports in the
Financial Times and
Bloomberg. Slonecker and other former Perella executives now work for Ducera Partners.
“
No one at Perella replaced Mr Slonecker as Codere’s financial adviser, even after Mr Slonecker left the Perella Weinberg Partners Group. Only a small number of junior Perella personnel continued to provide modelling and other ministerial services to Codere’s finance department,” Codere says in its skeleton.
When Perella was no longer providing services, it continued to bill Codere monthly and it made it clear that it planned to seek various success fees related to the restructuring including the €10 million success fee, the company told the court in the skeleton argument.
After email exchanges, Codere filed proceedings against Perella in Spain to get a declaration that Perella had breached and/or abandoned the contract, as well as a declaration that Codere did not owe Perella any further amounts under the contract and pecuniary damages arising from Perella’s breach of contract.
Perella challenged the jurisdiction of the Spanish court on Oct. 16, issued English proceedings on Dec. 21 and applied to stay their Spanish proceedings on Jan. 17.
Codere responded by acknowledging Perella’s services, despite technical defects in such service but disputed the jurisdiction of the English courts and sought on Feb. 10 to stay and dismiss the English proceedings. On March 10, before the issue of jurisdiction could be decided, Perella filed an application for summary judgment of its ancillary indemnity claim, which it contends is not a lis pendens of the Spanish claim and therefore outside of Codere’s jurisdictional challenge.
On April 18, a Spanish court expressed a provisional view that the contract does not confer exclusive jurisdiction to an English court. It decided to defer the final decision to an English court as the contract is governed by English law. As a consequence, the court stayed the Spanish proceedings awaiting for the English court decision.
An English court
sanctioned Codere's scheme of arrangement in December 2015.
The Case
Codere’s QC Andrew Stafford opened today’s hearing with his client’s argument on jurisdictional issues with regard to article 9.1 of a contract between the two parties dated April 18, 2013, and effective from May 23, 2013.
According to Codere’s skeleton argument, clause 9.1 of the contract states: “The Company (Codere) agrees for the benefit of Perella Weinberg Partners that the Courts of England will have non-exclusive jurisdiction to settle any dispute which may arise in connection with this engagement. ”
QC Stafford commented that “clause 9.1 looks like it’s giving Perella benefit of access to the English courts, but it’s not taking anything away from Codere.” The QC added that although the clause gives Perella a right to come to an English court, it is not a qualified obligation that all assets must be brought to an English court. Clause 9.1 says nothing about where Codere may sue, Stafford said.
He argued that it is possible to have parallel proceedings in other jurisdictions and noted that “Spain is the center of gravity here. Perella’s services were delivered in Spain.”
Mr. Justice Walker asked QC Stafford to look at article 25 of the Brussels I Regulation, which according to the skeleton argument says: “If the parties, regardless of their domicile, have agreed that a court or the courts of a member state are to have jurisdiction to settle any disputes which have arisen or which may arise in connection with a particular legal relationship, that court or those courts shall have jurisdiction, unless the agreement is null and void as to its substantive validity under the law of that member state. Such jurisdiction shall be exclusive unless the parties have agreed otherwise.”
Justice Walker continued his analysis of the jurisdiction issue and called for a 15-minute break at 11:45 a.m. BST.
After the pause, Perella Weinberg’s QC Scott, instructed by Freshfields, began his presentation. He referred to article 25 and said English courts should be assumed to have jurisdictional exclusivity in this case.
Turning to Codere’s Spanish dispute against Perella, QC Scott noted that even if it is not a breach of contract to commence proceedings in Spain, it is a breach of contract to continue the proceedings.
After some additional analysis with the two QCs, Mr. Justice Walker rose shortly after 1 p.m. The judge said he will give his judgment at 3 p.m. today.
More to come ...