Firm Achieves Win for Buyers of Credit Protection

On January 6, 2011, the First Department of the Appellate Division of New York State ruled that GEAB&P’s client, DKR Soundshore Oasis Holding Fund, was not required to include in a Credit Event Notice served for a credit derivative transaction the precise date and time at which the credit event occurred, in order to be entitled to the credit protection it had purchased from Merrill Lynch. Merrill had earlier rejected Oasis’ notice on grounds that it had failed to specify the precise date the Credit Event had occurred and that it was ambiguous in other respects. The case will now proceed to determine the validity of the actual credit event claim made.

“This decision is important for buyers of credit protection under CDS agreements, because it insures that sellers of credit protection cannot avoid their obligations to buyers based solely on hypertechnical arguments addressed to the Credit Event Notice,” said lead counsel David J. Eiseman, who represented Oasis along with GEAB&P’s Michael Munoz.

See coverage of this story in Reuters and Derivatives Week (subscription only).