4.3 Rt. 2010 s. 1089 (Petition for Bankruptcy)
Although the Nordic Trustee succeeded in the abovementioned case, its title to sue was yet again challenged when the Nordic Trustee petitioned for Thule Drilling ASA’s bankruptcy in April 2010. The Nordic Trustee argued that if it could obtain an attachment order against the issuer or its guarantors, it could also file a petition for bankruptcy against the issuer.(1) Rt. 2010 s. 1089 [12] On the contrary, the issuer contended that such a right was only vested with the issuer’s creditors, of which the Nordic Trustee was not one.(2) ibid [7] The District Court dismissed the petition, holding that the Nordic Trustee was not a “creditor” within the meaning of section 60 of the Bankruptcy Act of 1984.(3) Unpublished ruling of 25 May 2010 by Asker and Baerum District Court (TAHER-2010-69810) referred to within Rt. 2010 s. 1089 [3]-[4] Considering the line of reasoning in Rt. 2010 s. 402 (Attachment Order), the Court of Appeal overturned this ruling, noting that the no‑action clause also applied to enforcement actions, including a bankruptcy petition.(4) Ruling of 14 July 2010 by Borgarting Court of Appeal (LB-2010-99187)
The case was in turn heard by the Supreme Court, which confirmed that the Nordic Trustee was to be considered a creditor within the meaning of section 60 of the Bankruptcy Act, and thus entitled to file a petition for bankruptcy.(5) ibid [19] The court referred to its reasoning in Rt. 2010 s. 402 (Attachment Order), which was equally applicable to the present case.(6) ibid [15] One could not have a situation where the Nordic Trustee has title to sue when securing the bondholders’ claim through an attachment order, but no right to enforce by petitioning for bankruptcy.(7) ibid [16] To ensure a coherent set of rules, the Nordic Trustee was treated as a creditor of the issuer, although no monies would ever be owed to it.(8) ibid
This second ruling was short and concise. Following the ruling in Rt. 2010 s. 402 (Attachment Order), the conclusion should, in the author’s view, be quite obvious. The concerns raised against allowing legal actions by the Nordic Trustee, as a representative of the bondholders, did not convince the Supreme Court to dismiss the suit in the first case. Therefore, it would be legally incomprehensible if the Nordic Trustee – as security holder – could not enforce security or file a bankruptcy petition, when vested with a right to sue to obtain security. In the UK, for instance, the bond trustee’s authority to enforce security and to distribute proceeds is not questioned.(9) Philip Rawlings, The changing role of the trustee in international bond issues, JBL 2007 43-66, 47