Summary

On 6 August 2026, Mr Justice Leech in the English High Court granted a case management stay of the English claim brought by a group of Hunkemöller’s senior secured noteholders against Hunkemöller and the security agent. The claim will be stayed until the parallel, more advanced New York proceedings concerning the same 2024 “up-tiering” transaction have been determined at first instance.

The court held that the risk of inconsistent findings between the two jurisdictions, the fact that the up-tiering transaction is governed by New York law, and the more advanced stage of the New York litigation outweighed the noteholders' preference to proceed in England and the prejudice they said would be caused by delay. The decision is a further example of English courts using case management powers to manage the increasingly multi-jurisdictional nature of disputes arising from liability management exercises (LMEs). 

Background to the Hunkemöller dispute

The 2024 up-tiering transaction

Hunkemöller is a Netherlands-based retailer of intimate apparel, activewear and swimwear and accessories. Following the deterioration of its financial position, in June 2024 Redwood Capital Management LLC and related funds (Redwood), the company's majority creditor, committed EUR 50 million of new money in return for priority over existing creditors and for the “up-tiering” of its existing Senior Secured Notes (SSNs). This “up-tiering” elevated Redwood's SSNs to a priority ranking ahead of the other, existing SSNs. The SSNs were issued under a New York law-governed indenture.

Through a series of supplemental indentures between April and June 2024, Redwood's SSNs were cancelled and reissued as new, senior-ranking notes, while the remaining SSNs (97.6% of which were then held by an ad hoc group including the claimants) were left subordinated.

The 2025 enforcement and change of ownership

In late February and early March 2025, Hunkemöller defaulted on its interest payments, constituting events of default under its finance documents. On 21 March 2025, Redwood gave instructions to the security agent to take enforcement steps under the distressed disposal provisions of the company's English law-governed intercreditor agreement (ICA). The effect of this enforcement was to transfer ownership of the Hunkemöller group to a Redwood-controlled entity, with a valuation prepared by Grant Thornton (UK) LLP underpinning the transfer.

Litigation in New York, England and the Netherlands

The enforcement prompted a group of SSN holders (Cheyne, Contrarian and Man) to bring proceedings in New York, England and the Netherlands, seeking damages and declarations as to the invalidity of both the 2024 up-tiering and the 2025 enforcement.

In New York, the claimants argue that the 2024 up-tiering was invalid under the terms of the New York law-governed indenture. The New York claim, filed on 26 November 2024 in the Commercial Division of the New York Supreme Court, is significantly more advanced; discovery is complete (around 20,000 documents produced), 19 witnesses have been deposed, and trial is expected in early 2027.

In England, the claimants issued a claim form on 10 October 2025 raising two heads of claim, summarised in the table below.

The two English heads of claim

The Assenagon claim takes its name from Assénagon Asset Management SA v Irish Bank Resolution Corporation Ltd [2012] EWHC 2090 (Ch), in which Briggs J held that in principle a term is to be implied into an issue of notes that the majority of a class of noteholders must exercise their powers to bind the minority bona fide and in the interests of the class as a whole. Consistent with other recent LME disputes, notably Selecta in New York, the Hunkemöller claimants rely on this “minority protection” principle to challenge Redwood's conduct as majority instructing creditor. The principle, and its exact scope and origins, is also subject to intense scrutiny and litigation (most significantly in the ongoing New York Selecta proceedings and our recent podcast “Minority protection in English LME” unpacks the legal opinions given by Lord Neuberger and Dame Gloster in that case).

The stay application

Hunkemöller and the security agent applied to the English court for a stay (i.e. a temporary pause) of the English claim against them. They argued that, given the New York litigation had started earlier and was considerably more advanced, and that the validity of the up-tiering transaction under the New York law-governed indenture was already due to be considered by the New York court, it was appropriate for the English court to await that decision before giving its own judgment.

Why the court granted the stay

Mr Justice Leech applied the single test set out by the Court of Appeal in Athena Capital Fund SICAV-FIS SCA v Secretariat of State for the Holy See [2021] EWCA Civ 1051 as to whether a stay should be granted. This test is whether, in the particular circumstances of the case, it is in the interests of justice to grant a case management stay. 

There were a number of factors that led to Leech J granting a stay, but they included:

1. Risk of inconsistent judgments on the up-tiering issue

If the English proceedings were allowed to continue, there was a real risk that the New York and English courts would reach inconsistent findings on the validity of the up-tiering transaction, since both courts would be deciding substantially the same factual and contractual issues. The court held this was a strong reason in favour of a stay of the up-tiering claim.

2. The Assenagon claim could not be hived off

The claimants argued that, even if the up-tiering claim was stayed, their Assenagon claim should be allowed to proceed in England on its own. The court rejected this. One of the central issues in the Assenagon claim is whether the SSNs had any economic value at the time of the enforcement, which required consideration of the validity of the up-tiering transaction. The court therefore found it was not possible to determine the Assenagon claim without also engaging with the validity claim, so a partial stay of only the up-tiering claim was not workable.

3. New York law governs the up-tiering transaction

Because the indenture underpinning the up-tiering transaction is governed by New York law, the English court would need to decide its validity on the basis of expert evidence of New York law, before then applying English law to the Assenagon claim. The court held it would be far preferable for the New York court to decide the up-tiering issue first, with the English court then adopting those findings for the Assenagon claim. This would save time and cost, avoid the risk of inconsistent findings, and avoid the risk that the English court misunderstands or fails to correctly apply New York law.

4. The New York proceedings are far more advanced

As referenced above, discovery had already taken place in New York, and 19 witnesses had been deposed, whereas the English claim had only just reached the close of pleadings, with no disclosure or witness evidence yet exchanged. This weighed further in favour of a stay, since it might mean that the same documents would not need to be reviewed, or the same witnesses called, twice.

Wider implications for LME litigation

Hunkemöller is a further example of the increasingly international scope of LME litigation: a single LME can generate proceedings in multiple jurisdictions simultaneously. Modern capital structures mean that a company's debt documents can contain governing law and jurisdiction clauses in favour of numerous different jurisdictions, as well as claims linked to the jurisdiction of incorporation. This gives excluded creditors the opportunity to bring simultaneous legal action in multiple jurisdictions and against multiple parties.

But this case demonstrates that the English courts can and will use their case management powers to ensure that LME disputes are determined in an orderly sequence, thereby reducing cost and the risk of inconsistent decisions across jurisdictions.

Cheyne European Special Situations Fund Investments SCA and others v TMF Trustee Limited and another [2026] EWHC 2091 (Ch)