In Cheyne European Special Situations Fund Investments Sca v TMF Trustee Ltd [2026] EWHC 2091 (Ch), 2026 (Hunkemöller Judgment), the High Court has stayed English proceedings where parallel proceedings in New York had reached a later stage in the context of a cross-border restructuring dispute. In particular, the Court pointed to the risk of inconsistent findings arising out of the two sets of proceedings, the overlapping factual matrix between the claims in each jurisdiction, and the advanced nature of the litigation in New York compared to that in England, among other factors.
Relevant background
Hunkemöller International BV (Hunkemöller) is Dutch-based clothing retailer. On 30 June 2022 Hunkemöller entered into a Super Senior Revolving Credit Facility for €50,000,000 due in December 2026 and Bridge Term Loan Facility due in July 2027. In addition, in October 2022, Hunkemöller issued a series of Senior Secured 9% Notes (SSNs) worth €272,500,000 pursuant to an indenture between Hunkemöller, BNY Mellon Corporate Trustee Services Ltd and TMF Trustees Limited (TMF) (as Security Agent) (Indenture). Both the SSNs and the Indenture were subject to New York Law.
The Claimants in the present case were part of a faction of beneficial owners of €84,325,000 in value of the SSNs from 2022 to 2024, while Redwood Capital Management LLC (Redwood) and its related entities held €186,075,000. The SSNs were structured by the issuing of a single global note to a single custodian which was then traded on public exchange platforms like Euroclear or Clearstream. Hunkemöller also entered into an English-law governed intercreditor agreement in 2022 (ICA), to which TMF was also a party, which determined the ranking of Hunkemöller’s individual creditors.
Hunkemöller experienced financial issues in 2023 and 2024 and issued a supplemental indenture amending the terms of the Indenture in April 2024, while Redwood also issued a Super Senior Term Loan for a €50,000,000 facility ranking above the SSNs. In June 2024, Hunkemöller issued a further supplemental indenture and a new global note for €186,075,000 due in November 2027. In addition to this, Hunkemöller also cancelled Redwood’s SSNs reducing the overall value of the SSNs to slightly more than the value held by the Claimant faction. This restructuring is referred to in the Hunkemöller Judgment as the “Up-Tiering Transaction”.
Later in 2024, the Claimant faction brought proceedings challenging the validity of the Up-Tiering Transaction. Meanwhile, in early 2025, Redwood provided further facilities to Hunkemöller, which also further restructured its debt, resulting in a structure in which Redwood held the vast majority of the super senior liabilities further to its super senior term loan granted in 2024, in addition to that of the SSNs following the 2024 re-issue in its favour.
Shortly after in 2024, multiple events of default under the ICA occurred and, on 21 March 2025 (Enforcement Date), a series of enforcement actions look place which resulted in TMF arranging for certain secured shares being transferred to a Redwood entity and all of the super senior facilities and senior secured facilities (which included the SSNs held for the benefit of the Claimants’ faction) being transferred to the same Redwood entity. The original SSNs issued in 2022 were cancelled shortly afterwards.
The New York Proceedings
On 31 March 2025, shortly after the Enforcement Date, Hunkemöller, among others, successfully had the Claimant factions’ original claim dismissed in New York, following which new proceedings were issued in New York, again challenging the validity of the Up-Tiering Transaction, and alleging various breaches of the Indenture (the challenge to the Up-Tiering Transaction is referred to in the Hunkemöller Judgment as the “Up-Tiering Claim”, and relates to the Indenture, governed by New York Law).
The English Proceedings
On 10 October 2025, the Claimants commenced proceedings against TMF and Hunkemöller in England alleging that the action taken by TMF was “invalid and ineffective” on the basis that Redwood was not entitled to give the instructions it had given to enforce. The Claimants asserted that Redwood could not have constituted the Majority Senior Secured Creditors at the date it gave instructions because a) the notes it held were invalid and had been issued in breach of the terms of the Indenture, and b) the SSNs that Redwood had held were not valid because they had been cancelled as part of the Up-Tiering Transaction (referred to as the “Assénagon Claim”, relating to the ICA and governed by English Law).
In June 2026, TMF and Hunkemöller applied for a stay of the English proceedings on “case management grounds” on the basis that the English Proceedings were “materially related” to the New York Claim which were said to arise from the same facts and involved the same parties.
What the Court decided and why
The Court granted the Defendants’ application for a case management stay of the English Proceedings pending the first instance decision in the New York Proceedings. In his decision, Leech J considered the following factors to determine whether granting the stay was in the interests of justice:
The risk of inconsistent judgments on the Up-Tiering Transaction
As above, the Court concluded that the issues before it in so much as they related to the Up-Tiering Claim were based on the same issues in the New York Proceedings – whether the Company had breached the Indenture. Although the Particulars of Claim in the English Proceedings did not specify the sections of the Indenture the Claimants alleged had been breached, they had admitted in their Amended Reply that the relevant sections were the same as those relied on in the New York Proceedings.
In these circumstances, Leech J concluded that there was a real risk that the same issues could be decided on differently in England and in New York and this was a strong reason to grant a stay in respect of the Up-Tiering Claim.
Could the Assénagon Claim be hived off in circumstances where the Up-Tiering Claim were stayed?
The Court held that this was not possible because, even if the Assénagon claim were hived off and dealt with separately, the facts underpinning it were still drawn from the same circumstances. By extension, it would be a relevant factor in the English Court deciding whether the Claimants were “out of the money” at the Enforcement Date in concluding whether or not TMF should have known that the instructions it received from Redwood to enforce were invalid. Therefore, the Assénagon Claim could not be decided without reference to the facts involved in the Up-Tiering Claim, and a risk of inconsistent findings with the court in New York remained.
What was the effect of the exclusive jurisdiction clause in the ICA?
The Claimants submitted that the exclusive jurisdiction clause in the ICA was a strong argument against granting a stay. Leech J conceded that the clause was a relevant factor, though he did not accept that the Claimants had standing under clause 1.4(d) the ICA to enforce it on the basis that they were themselves not Senior Secured Noteholders, and he found the parties to have intended a “No Look Through” principle to apply to the ICA, the Indenture and the SSNs. In doing so, he observed that the term “Senior Secured Noteholders” in the ICA was expressly restricted to the “registered holder from time to time of the Senior Secured Notes”, which the Claimants were not.
Leech J further noted that the parties did not disagree that England was the appropriate forum for the Assénagon Claim, he held that this did not outweigh the risk of inconsistent judgments between England and New York. The question was not so much whether England was the correct forum for this element of the dispute to be heard, but when it was appropriate to hear it.
Why the New York Proceedings should go first
In deciding whether to stay the English Proceedings, Leech J also considered the following factors – 1) that the Claimants had filed in New York in relation to the Up-Tiering Claim and in England in relation to the Assénagon Claim, 2) though there was no dispute that the Up-Tiering Claim would be determined according to New York law, the English Court would have to consider the facts underpinning it and hear expert evidence on New York law in order to decide the English Proceedings, 3) the New York Proceedings were noted to be significantly more advanced – with disclosure and the deposition of witness statements having already taken place – than the English Proceedings, which were only at CMC stage, and 4) the only prejudice the Claimants would suffer as the result of a stay of the English Proceedings would result from the uncertainty generated by the stay pending the resolution of the New York Proceedings – the Court held that this latter point could be alleviated if the stay were pending the first instance decision in New York only, with leave to restore should there be an appeal there.
Key takeaways
The Hunkemöller Judgement demonstrates that, where a restructuring gives rise to closely connected claims in different jurisdictions, the English court may use its case management powers to control the order in which those claims are determined.
Although exclusive jurisdiction clauses may be indicative of the appropriate forum for disgruntled parties to bring claims, they are only part of series of factors that the English Court will consider if asked to stay proceedings in favour of parallel litigation taking place in the courts of other countries. The Court will look at the substance of the overlap, the risk of inconsistent findings, the governing law of the relevant issues, the relative progress of the competing proceedings and the prejudice caused by delay.
