Parties Listed at Schedule 1 to the N244 v Kroll Trustee Services

MR JUSTICE FANCOURT:

1. This is an application by the applicants named in Schedule 1 to the application notice, including Deutsche Bank AG and accounts managed by Oaktree Capital Management (UK) LLP and Oaktree Capital Management (Europe) LLP for pre-action disclosure against the respondent, Kroll Trustee Services Limited (“Kroll”). Kroll was the security agent and trustee in an intercreditor agreement originally dated 9 February 2018, though Kroll itself took up that position at a much later time. The intercreditor agreement relates to lending to a group of companies called the Hurtigruten Group (“the Group”). The aggregate debt was in the region of €650 million, of which the applicants held about €45 million.

2. The application before me is made under paragraph 31.16 of Practice Direction 57AD of the Civil Procedure Rules, which precisely replicates rule 31.16 of those Rules. Kroll does not oppose the application as such but requires the applicants to satisfy the court that an order for pre-action disclosure should be made. Kroll has explained in a witness statement and through submissions made to the court that it does not consent because of confidentiality obligations that it considers bind it, which would prevent it from voluntarily disclosing the documents that the applicants seek.

3. The background very briefly summarised is the following. A restructuring transaction relating to the debt that I have already alluded to took effect, apparently, on 12 February 2025, after a long run up which started with a lock-up agreement signed by various of the existing creditors of the Group. I will refer to those creditors, as the parties have, as the “ad hoc group”, which did not include any of the applicants. That lock-up agreement, which started the process towards a restructuring, was made on 28 November 2024. The restructuring was initially intended to be effected by consent, under the terms of the intercreditor agreement, but this required 95% by value of the lenders in what was called Old Facility B to approve it. The ad hoc group is believed to have had somewhere between 75% and 80% of that debt.

4. What was proposed included the cancellation of the whole of the Old Facility B debt in return for an opportunity to lend new debt, a share of a small 2.5% equity share said to be worth in the region of €4.7 million in one of the Group companies, and a share in a further 45% of this equity if the lenders consented to the restructuring and/or introduced new money both by way of new loans and new bonds governed by Norwegian law. Thus, if an existing lender did not participate or introduce new money, their debt was cancelled and they obtained at best a share of the 2.5% equity, whereas the remaining equity was allocated in one of the main companies 100% to the ad hoc group and as to the other main company 50% to the ad hoc group, 45% to participants in new lending, and a further small share to any Old Facility B lenders who did not participate but consented early to the restructuring.

5. Materially, for the purposes of this application, the existing lenders including the ad hoc group and the applicants ranked pari passu with all the other creditors in Old Facility B. The ad hoc group therefore may have obtained value from the restructuring many times greater than the applicants did under the terms of the transaction. Indeed, the applicants would only obtain their smaller share of the value if they were prepared to release any claims that they had arising from the transaction, which they have not done.

6. The proposal for the restructuring to proceed consensually was aborted because nearly 12% of the lenders voted against it, as the applicants did. That was clear by 27 December 2024.

7. What then happened was that the proposed restructuring was effected in any event, purportedly under the terms of the intercreditor agreement as a distressed disposal. It is understood that the instruction to do so was given by the ad hoc group as a priority instructing group of the Old Facility B lenders under the terms of the intercreditor agreement. The sequence appears to have been that a restructuring implementation deed was made by the ad hoc group, and possibly others, on 6 February 2025. Enforcement instructions were then given by the ad hoc group as a majority of the Old Facility B lenders to Kroll on 12 February 2025, and Kroll then exercised its powers as a trustee of the debt to transfer the debt, following which the debt was extinguished.

8. One Kroll group company notified the applicants of this on 13 February 2025 and indicated that the applicants could be provided with certain documents relating to the restructuring, which included the enforcement instructions given to Kroll and an opinion from FRP Advisory as to the fairness of the restructuring; but when the applicants pressed for these among other documents, they were told that they could not be provided because of confidentiality restrictions.

9. On 10 July 2025 the applicants wrote to Kroll asking for provision of the documents that are now sought in this application. They asserted they had a contractual right to them in any event under the terms of the intercreditor agreement and the original facilities agreement. The respondent offered to provide the FRP opinion but only on the basis that the applicants would agree not to rely on it in any way or provide it to their lawyers. Otherwise, Kroll sought to rely on a contractual duty of confidentiality which it owed to others, but which others have not been identified.

10. Although a redacted version of the restructuring implementation deed was provided on 2 September 2025, the names of the participants were part of the redactions that were applied to that deed. The applicants therefore do not know with any degree of confidence who was in the ad hoc group, who was not, and the extent to which any existing lender participated in the restructuring by injecting new money. As a result of Kroll’s reliance on its duty of confidentiality, none of the relevant documents have been provided and so this application was issued on 16 September 2025.

11. The documents that the applicants seek have been reduced in the intervening period on the basis of co-operation from the respondent identifying the documents originally sought that are within its possession or control. Kroll has made a detailed witness statement explaining what documents it has and what documents it does not have and providing a full explanation. The respondent offered to conduct further searches if required, but the applicants have not required it to do so.

12. The applicants now seek, in the final version of the draft order, the following documents: “(a) The identified RID transaction documents and the identified LUA transaction documents both as defined in Brocklesby 1 and the senior agent instruction letter, the Opco security agent instruction letter and the super senior agent instruction letter each as described in Brocklesby 1 at paragraph 55; (b) The FRP documents as described in Brocklesby 1, namely: (i) engagement letter between the respondent and FRP dated 24 January 2025 together with the FRP standard terms and conditions and the reliance letter of the same date between FRP and the respondent; (ii) the fairness opinion letter dated 11 February 2025 sent by FRP to the respondent; and (iii) the further FRP report from January 2025 referenced in Brocklesby 1 at paragraph 61(c). (c) Documents which record or evidence the individual and separately aggregate holdings and cross-holdings of different types of rights or interests including in relation to lending or equity that each of the relevant entities had in connection with the Hurtigruten Group immediately prior to and/or immediately after the restructuring.” The references there to Brocklesby 1 are to the first witness statement of Mr Brocklesby made on behalf of Kroll in response to this application.

13. The claim that the applicants say they intend to bring is that the exercise by the majority of the class of Old Facility B lenders of the power to instruct Kroll as security agent to exercise the power in the intercreditor agreement to dispose of the relevant debt was an abuse of majority power, as it was not exercised bona fide in the interests of the class as a whole but was exercised for the benefit of or to prefer the private interests of the ad hoc group members. That is on the basis that they were given a disproportionately far greater share of the benefits of the restructuring than non-consenting members of the class obtained. On that basis, the applicants will seek in proceedings to obtain declarations that the enforcement instruction to Kroll was invalid, and so the exercise of the powers by Kroll to sell the debt was invalid, and consequential relief. What the consequential relief may be exactly is necessarily unclear at this stage, but the root of the claim to be brought is the alleged abuse of power under the terms of the intercreditor agreement.

14. It is a claim that the applicants intend to bring against the members of the ad hoc group when it can identify them, against Kroll as security trustee, and possibly against others. However, the applicants do not yet have access to the documents that agreed and gave effect to the transaction, or the actual instructions given to Kroll, or the independent advice of FRP on the fairness of the transaction as implemented, or documents evidencing the nature and extent of the interests of those who were members of the ad hoc group.

15. The limited classes of documents sought by the applicants on this application are intended to enable them to know the following: first, exactly what instructions were given to Kroll under the terms of the intercreditor agreement; second, who gave those instructions and what those persons individually and collectively obtained under the transaction in question; and, third, the value of the benefits that those persons received.

16. The threshold requirements for making an order under rule 31.16 are the following: first, that the applicants are likely to be parties to the intended proceedings; second, that Kroll is likely to be a party to the intended proceedings; third, that the documents sought would fall within the scope of standard disclosure by Kroll in those proceedings; and, fourth, that the order sought is desirable in order to achieve one of three things: (1) to dispose fairly of the proceedings; (2) to assist the dispute to be resolved without proceedings; or (3) to save costs. The fourth requirement therefore gives the court a discretion to be exercised by reference to those objectives, but which is to be considered broadly “on all the facts and not merely in principle but in detail”: Black v Sumitomo Corp [2002] 1 WLR 1562 at [81].

17. The principal and threshold relief likely to be sought by the applicants in the proceedings is declaratory relief as to the instructions given to Kroll being a fraud on the power, or an excess of exercise of the power, because it was not exercised for the purpose for which it was conferred, namely to benefit the class of lenders as a whole, and was therefore invalid, and a declaration that Kroll acting upon the instruction to effect the restructuring was therefore also invalid.

18. The applicants will self-evidently be the claimants in the intended proceedings and Kroll will be a defendant even if, which is not yet clear, it is not alleged that it acted culpably in any way or if no substantive relief other than declaratory relief is sought against the respondent. The respondent is nevertheless the person that did the matters complained of, and will properly be joined as a party in order that the declaratory relief granted will bind it: see the well-known observations of Aikens LJ in Rolls Royce v Unite the Union [2010] 1 WLR 318 at [120].

19. It is unnecessary for a freestanding cause of action to be pleaded against a respondent to this kind of application. It is sufficient, as the rule expressly states, that the respondent is likely to be a party to the proceedings such that disclosure will in due course be ordered against it. The main issue in the intended claim is clear, as I have already summarised it, and it is equally clear that the documents sought now would be within an order for standard disclosure against Kroll because they are evidentially relevant to the case and the assumed defence, if one is filed, relating to improper purpose and abuse of power, and also to the weighing of the benefits that the members of the ad hoc group obtained as compared with their existing interests on the one hand and the available benefits to the applicants and other creditors on the other hand.

20. In my judgment, this disclosure, if it does not result in compromise before the proceedings are brought, will be necessary not just for the applicants to plead their claim but also to dispose of it fairly. The disclosure documents are likely to be some of the most relevant evidence in the claim. I also accept that making pre-action disclosure would be likely to save costs as even without this disclosure the applicants could make a stab at pleading a claim, perhaps with a representative defendant in addition to Kroll, but such a start would almost inevitably require amendments, and perhaps additional parties to be joined, following disclosure at a later stage. Costs and time are therefore likely to be saved by making this order now, so that if a claim is to be brought it can be fully and accurately pleaded from the outset.

21. As for the exercise of discretion, the convenience of granting this order at this stage is obvious. It will involve the respondent in relatively little inconvenience, as it accepts, but will be of considerable importance to the appropriate formulation of the applicants’ claim. As the applicants put it, there is, on first impression, a response that is called for from the intended defendants. Beyond that, I prefer not to express any view about the strength of the claim at this stage, save to say that it appears to be legally coherent and its strength will depend inevitably on all the facts. Given the information asymmetry that exists, and which is itself a reason for the order to be made, it is difficult to assess the merits further at this stage. The application made is relatively narrow and appropriately targeted at documents that relate directly to the central issue.

22. The additional issues that arise and require some consideration on the exercise of the discretion are the questions of whether the applicants have a contractual right to be provided with these documents in any event, and the nature and extent of the confidentiality in the documents to which Kroll has alluded.

23. As to the contractual right, I am satisfied, having heard Mr Al-Attar KC in relation to the way that such a claim would be put, that to bring proceedings seeking to enforce a contractual right would be more complex and more difficult for the applicants than making the application that they have under rule 31.16. Although there may be an argument of a contractual right to the documents in question, the translation of the rights into an obligation on the respondent to provide them now is not straightforward. This is not a case, therefore, where the court should decline to exercise its discretion on the basis that the applicants have a better and more obvious basis for obtaining the documents in question.

24. In relation to confidentiality, confidentiality on an application for disclosure may be of considerable significance in some circumstances, or of little, if any, significance in others. This is not an application for disclosure against a non-party, or in relation to the appropriateness of a witness summons. It is an application for disclosure against one intended defendant to a claim where the obligations of confidentiality are owed as between that defendant and what are likely to be other defendants to the claim. In those circumstances, as Mr Al-Attar submitted, if the claim were issued naming members of the ad hoc group (so far as known or suspected) as defendants, the relevant confidential documents would clearly fall within the scope of disclosure to be provided by those defendants in the proceedings themselves, to which confidentiality would be no answer.

25. In those circumstances, it does not seem to me that the fact that the documents sought, or some of them, may be confidential to members of the ad hoc group is a good reason for declining to exercise the discretion to order disclosure at this early stage. On that basis and for the reasons I have given, I propose to make the order that the applicants seek. The terms of the order have effectively been agreed. I emphasise that they have been “agreed” by Mr Robins KC on behalf of Kroll only on the contingent basis that the court would see fit to make an order for disclosure.

26. The one remaining issue which is not entirely agreed is whether the documents that are sought in paragraph (c) should extend, as the applicants seek, to documents which evidence the individual holdings and cross-holdings that members of the ad hoc group have in the restructured companies, or be limited to documents that evidence only their aggregate holdings and cross-holdings. I am satisfied on the basis of the explanation I have been given that it may well be material, in evaluating the fairness and therefore the lawfulness of the restructuring that took place, to be able to identify the benefits and interests that individual members of the ad hoc group obtained in the two principal Hurtigruten companies, depending in some cases on whether they provided further money to the Group.

27. Although the aggregate interests may be able to be identified more simply, the fairness of what was offered to any participating members in the ad hoc group may depend on the extent to which they elected to provide new funding to the individual companies as well as taking the interest that was attributable to their existing lending. I will therefore approve the wording of paragraph (c) in the form in which the applicants seek. (Judgment ends) ---------------------------- (This Judgment has been approved by Mr Justice Fancourt.) Digital Transcription by Marten Walsh Cherer Ltd 2 nd Floor, Quality House, 6-9 Quality Court, Chancery Lane, London WC2A 1HP Tel No: 020 7067 2900. DX: 410 LDE Email: [email protected] Web: www.martenwalshcherer.com