Investors unite in Canary Wharf dispute

Subsidiaries of insurance giants Aviva and Legal & General are among a group of investors that have been cleared to act together in a case against Canary Wharf Group related to early bond repayments. 

The dispute centres on CWG’s sale of 10 Upper Bank Street to Qatar Holdings and China Life in June, proceeds from which were used to partly repay debt worth around £577 million held by noteholders. The bonds were issued as part of a mortgage-backed security known as Canary Wharf Finance II.

Deutsche Bank, acting as a trustee on behalf of the noteholders, has argued this should have triggered an additional payment of £168.8 million to reflect a so-called "Spens clause".

The clause is aimed at minimising the risk of losses to investors in the event of early redemption. The notes issued in this case were not due to mature until 2033, according to a person familiar with the matter.

Court documents seen by Financial News show that nine of the noteholders, including Aviva Life & Pensions, Aviva Annuity, Legal & General and subsidiaries of Scottish Widows Investment Partnership, have been given the green light to have representation in court as defendants. They will represent the whole class of noteholders.


The move is significant because investors have “skin in the game” and will now have their own, separate legal representation in court alongside lawyers acting for Deutsche Bank's trustee business, the person said.

The UK High Court is set to hear the case next summer.

Aviva, Legal & General, Canary Wharf Group and Deutsche Bank declined to comment. Scottish Widows Investment Partnership Property Trust did not respond to requests for comment.