English Court Orders Disclosure In Dispute Over Hurtigruten LME

The English High Court recently considered the approach to pre-action disclosure in the context of liability management exercises. ¹The Parties Listed at Schedule 1 to the N244 v Kroll Trustee Services [2026] EWHC 216 (Ch) 

In the ongoing dispute as to the validity of the Hurtigruten liability management transaction, the High Court ordered Kroll, in its capacity as security agent and trustee, to disclose a number of documents in the early stages of the litigation. 

The judgment highlights that lenders participating in liability management transactions may not be able to rely on confidentiality obligations to prevent disclosure to dissenting creditors challenging the validity of LMEs.

Background

The proceedings relate to the restructuring of the Hurtigruten group, a Norwegian cruise line business. Hurtigruten began experiencing financial difficulties during 2024 and the group attempted, but failed, to implement a consensual restructuring. A liability management transaction was subsequently implemented by an ad hoc group of lenders using the distressed disposal mechanics under the applicable intercreditor agreement. The non-participating lenders alleged that the ad hoc group recovered materially higher value in the transaction compared to the dissenting creditors. As part of that transaction, Kroll as security agent was instructed to, and subsequently did, effect the distressed disposal. 

The dissenting minority are challenging the LME, alleging that the majority had unlawfully used the provisions of the intercreditor agreement as a ‘fraud upon a power’ and as such the enforcement instructions to Kroll were invalid and the transaction should be unwound. 

To support their case, the dissenting creditors requested that Kroll provide documents such as instruction letters to the security agent, the financial advisor’s fairness opinion and details of the debt and equity holdings in the Hurtigruten group. Although Kroll initially provided some documents, including a version of the restructuring deed, which redacted the names of the members of the ad-hoc group, it refused to provide further documents, citing confidentiality restrictions.

The Proceedings

The dissenting creditors therefore brought an application for pre-action disclosure in the High Court under CPR 31.16, seeking disclosure of the requested documents from Kroll. That provision  allows a party to obtain an order for disclosure of documents that are relevant to proceedings that are anticipated to commence in due course, in this case, proceedings by the dissenting minority against Kroll and the ad hoc group. 

Without much difficulty, the Judge granted the disclosure sought, for the following reasons:

• It was clear that Kroll would be a defendant in future proceedings – and it did not have to be the main defendant. 
• There was no requirement for there to be a freestanding cause of action against Kroll. The requirement was for the documents to be evidentially relevant, which the Judge concluded (with little hesitation) that they were.
• The application was “relatively narrow and appropriately targeted at documents that relate directly to the central issue” and involved “relatively little inconvenience” to Kroll.
• The disclosure was both relevant to the claim the minority creditors sought to bring, as well as the fair disposal of those claims.
• The convenience of making the order at the pre-action stage was “obvious”.
• Confidentiality was not a strong consideration when the parties to benefit from that confidentiality were likely other defendants in the dissenting creditors’ proposed claim and the confidentiality would likely have to give way in disclosure in the main proceedings in any event. 

Key Takeaways

The judgment provides important lessons for both lenders and agents in the context of LMEs.

For creditors participating in a liability management transaction, any documents which form part of an LME transaction (and potentially those which are related to the planning and structuring of the transaction, such as emails and reports) should be considered documents which might be the subject of a pre-action disclosure request if a dispute arises in relation to the LME in due course - confidentiality undertakings will likely not provide  protection if an order for disclosure is sought from the Court, even if they may do in other contexts.

For security agents, the judgment emphasises the difficult position they may find themselves in where they are tasked with carrying out a transaction on the instruction of the requisite majority but which results in losses to the dissenting creditors.

For dissenting creditors, this case confirms that they have a powerful tool to challenge LMEs. The threat of pre-action disclosure may also be useful for minority creditors in ongoing negotiations to structure an LME, to remedy the information asymmetry which they are often exposed to.

Additional authors: Alex Jardine