Language of document :

Appeal brought on 20 December 2019 by Algebris (UK) Ltd, Anchorage Capital Group LLC against the order of the General Court (Eighth Chamber) delivered on 10 October 2019 in Case T-2/19, Algebris (UK) and Anchorage Capital Group v SRB

(Case C-934/19 P)

Language of the case: English


Appellants: Algebris (UK) Ltd, Anchorage Capital Group LLC (represented by: T. Soames, avocat, N. Chesaites, advocaat, R. East, Solicitor, D. Mackersie, Barrister)

Other party to the proceedings: Single Resolution Board (“SRB”)

Form of order sought

The appellants claim that the Court should:

set aside paragraph 1 of the operative part of the order under appeal;

set aside paragraph 2 of the operative part of the order under appeal and order the SRB to bear their own costs and to pay the costs of the appellants, relating to both the proceedings at first instance and to this appeal, and

grant the appellants standing to seek annulment of the contested decision contested before the General Court.

Pleas in law and main arguments

By the first plea in law, the appellants contend that by ruling that the appellants lack direct concern, the General Court committed an error of law by misinterpreting Article 20(11), first subparagraph, of Regulation (EU) 806/20141 (“SRMR”), as well as a violation of the appellants’ property rights.

The General Court’s interpretation led it to erroneously conclude that in circumstances such as the present: (1) expropriated parties such as the appellants will only have standing to challenge the failure to undertake an ex-post definitive valuation where they can obtain compensation under Article 20(11), second subparagraph, (b) SRMR; (2) compensation is only due under Article 20(11), second subparagraph, (b), where the resolution scheme applied makes use of either the bail-in tool under Article 27 SRMR, the bridge institution tool under Article 25 SRMR, or the asset separation tool under Article 26 SRMR; (3) therefore, creditors (and shareholders) will have no standing. As a consequence, in circumstances such as the present, where it is difficult to conceive of any party other than expropriated shareholders and creditors who would have standing to challenge the failure of the SRB to carry out an ex-post definitive valuation, the SRB is permitted to rely on deeply flawed, highly unreliable provisional valuations. The appellants have a direct concern in the decision not to conduct a definitive valuation because it is very likely that a definitive ex-post valuation 1 and 2 would confirm that the Bank had been valued incorrectly, requiring the SRB to consider whether to compensate the appellants through a write back of creditors’ claims and/or an increase in the consideration paid by Santander under Article 20(12) SRMR. If the SRB exercised its discretion not to compensate, that decision would also be subject to challenge and an action for damages.

The General Court’s interpretation of Article 20(11) also violates the right to property, enshrined in Article 17 of the Charter of Fundamental Rights, because an ex-post definitive valuation is necessary to ensure that: (1) the expropriation of the appellants’ AT1 and T2 bonds is conducted under the conditions provided for by law, and (2) fair compensation is paid, i.e. by determining the Bank’s value on the basis of a definitive ex-post valuation.

2. By the second plea in law, the appellants claim that, in any event, the General Court committed an error of law in concluding that the appellants would not be entitled to compensation under Article 20(12)(a) SRMR, thereby misinterpreting that provision and violating the principle of non-discrimination.

The Appellants submit that in the context of bank resolution, Article 20(12)(a) should include circumstances in which relevant capital instruments (i.e., AT1 and T2 bonds) are written down by 100% (as in the present case), whether they are written down under Article 22(1) SRMR, or under the bail-in tool, for two reasons. First, this approach is consistent with the fact that a 100% ‘bail-in’ and a 100% ‘write-down’ / ‘conversion’ of AT1 and T2 bonds are effectively and in substance the same thing (with the same economic effects), as they both write down debt owed by a bank to its creditors, or convert it to equity. Second, it would be discriminatory and perverse if creditors / shareholders whose debt instruments were written down and converted under Article 22(1) SRMR could not obtain compensation, while those subject to a bail-in under Article 27 SRMR could obtain compensation, despite the fact that: (1) the legal mechanism for and practical effect of a write down and conversion under Article 21 SRMR and a bail-in under Article 27 SRMR is the same, and (2) both measures were informed by the same provisional valuation.


1 Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ 2014, L 225, p. 1).