this is not working well done sir and will give you time back i don't know why they're not working must be thank you you can proceed there were two key errors with the district court determining that after serengeti accelerated the northlake c d o most senior class one notes that american generals class one m notes should be paid before serengeti is class one a notes first the district court held that article seven subordination provision article seven of the security agreement that the subordination provision does not create special post acceleration payment rules which the record proves in the briefing proves is incorrect second the district court disregarded the plain language answer to the dispute in this case found  connection with analyzing the contracts here under english law the offering memorandum is part of the factual matrix that must be considered when interpret in contracts under english law and under new york law  the memorandum is part of the writings that form part of the northlake transaction which is why this court in the bank of america case held that documents like memorandums must be considered when analyzing priority absolutely not your honor section five is expressly subject to section seven section seven it's subject to means section seven modifies section five section seven i entire purpose is to demonstrate those special rules that apply after an acceleration there are two set two sentences in the first section of section seven seven a one a the first says that in the ordinary course the payment priorities as between the various classes of notes are governed by section five that's the ordinary priority of payments the very next section sentence of section seven zero one talks about what happens because it's obviously critical to the dispute section seven says that if any of event of default has not been cured or waived this is an apology it is page three thirty nine of the record that's what i'm looking at is the subordination cause it's the second sentence second full sentence and seven zero one eight it says if any event of default has not been cured or waived and acceleration occurs in accordance with the conditions interest in the class one notes shall be paid in full in   the definition of class one notes in this is not disputed is and we can find a particular page reference but class one notes are defined as the class one a notes and the class one m notes together say what happens it does because it says they need to be paid to get it and the word together has meaning together has a temporal element to it would that would apply across the board that would also apply in connection with other sections and i wonder if would tell me maybe you're going to point me back to the definition of class one notes but does is there anywhere else in section seven point zero one a they clearly says anything about the relative priority among the two series of possible notes separate and apart from the definitions separate apart from the definition no you're on to the rules in section seven they're crystal clear the class one notes isn't that credibly complicated convoluted way you are saying of something that could have been said perfectly simply i mean one looks at this and it looks as though there's one category of notes it is superior to another category of nodes within one category and that's really it looks like now you're trying to tell us with in some circumstances they are not different they are vis a because we should really be in to something what the wor together means and you know i guess it's conceivable but one would have expected business people to have said that directly you're out of the class one day and one am notes under every every document in this transaction or parry pursue for all purposes except as otherwise provided in the priority of payments why is it just educate me a little bit on someone familiar with serios but another  context why is it that the class one and them notes would see priority to class the class one a notes in the event of the acceleration as a commercial  those notes reflected the controlling class one notes and so prior to an acceleration of event there was a failure of a primary coverage test and the class i am notes were repaid and they were repaid one hundred twenty million dollars  their principal before the class one day notes that was a huge advantage that the class one and no ted but now at at the moment in time were two things happened first that was invented to fold under this transaction so that there was no longer sufficient funds to repay all of the class one notes and second the searing gaze class won a nose became the majority all of a sudden after seven years of the class m getting paid before the a's the a's became the majority of the class one notes and with becoming the majority synchs senior controlling class holder serengeti had a vailable to it the panoply of remedies that a controlling holder gets when there is an event a default one of those remedies was acceleration and acceleration has very clear textual ramifications in this deal one can speculate why the drafters were not more clear when they use the word together only through a definition in section seven it does not change the fact that section seven clearly supercede section five lays out payment rules that apply post acceleration into your honor's point exhilaration is an extraordinary remedy extra listen which is not what the directors were focused on when they put these docking to gether in two thousand celebration means by and large is not enough to pay the most senior notes and the deal is an extraordinary district it's basically done notes that were originally mature that we're going to mature in twenty thirty three became do immediately it is entirely commercially reasonable it comported business common sense and english law and sigma for that matter that when there's something like enforcement of it and acceleration and serengeti as the most as the majority senior know holder declares notes due in payable immediately to it that serengeti gets to share together and pro rata in the proces of those notes the fact is the plain language of section said it's a contract and it's the only provision in the contract that addresses this situation payment principle to class one no holders in the event of an acceleration and what it says when one does something very simple which is add the defined term of the definition to a defined term could you tell me again what it means when it says if there is ambiguity or difference between section two and section seven of that section  inconsistency i'll tell you what it means in a second is not the superseding payment rules of section seven there is no there is no dispute the trustee has been paying for there's no dispute for example that the payment will not class after acceleration the class one notes get paid before class to note in every way cause the trustee to change the section five payment rules that in the event of what occurred which was a conflict between section five payment rules and section seven superseding subordination principles the trustee went with section seven superseding principles why why is it that in section five there is the specific referenc together has to mean something so why why why why does it appear here in section five if you just told us that that is that is the class one notes but here it's broken i'm looking at page three twenty eight and you tell us that we were together is so clear that it more than covers of that my problem is that the word together is not as clear as  mind that that's absolutely correct there's no question that if the word pro rated was using section said to be no dispute here the word pro rata is used in the offering memorandum in the only crystal clear exposition usually though this is the first document that we should look at you with the first this is the this this article five and seven are the first provisions that we should review and i understand that under english law we should look at this is part of the factual matrix what one must look at whatever that should yes must but our attention in both briefs and has been drawn to the language in this provision right and in a rticle seven so i correct that that's correct and so all i'm asking and i think we've asked it once or twice maybe three times now is what are we to draw from the fact that section five or article five refers specifically to to class one and then notes in class one a notes not just class one notes but the two categories of class within class one and uses the term parade i think what one can draw is that the use of the word parade in the ordinary course priority payments dealt with a non acceleration scenario a more ordinary course scenario where payments were coming in every quarter and being paid out and there were very detailed steps that needed to be followed with respect to distributions which section seven deals with  situation where an acceleration been declared the music has effectively stopped and the question is what is the relative priority among the various classes you have would you agree that it would have been much clearer your honor we wouldn't be hunted same language that a article five of the program the language appeared and it's absolutely correct and we wouldn't be here but because the word together was used in section seven and not prorated we have to ask well what are the drafters intend when they decided to what's your responses section one only has this impact this dispositive impact that notes the end of the i am notes in the i a knows have to be paid product together because it uses a defined term together plain language of section seven a one way is that these notes have to be paid together in cash in unfold before any other notes are paid together has a temper element together means at the same time so what we're saying is well when i look ever mean sequentially and so what we're saying is the plain the plain language of section five when viewed in context the context creates questions ambiguity whatever you might call it but the plain language of section seven zero one is what it is it says pay these for together that makes sense because in a context like this where you have notes the i am in the eye is that have different principle balances paying them together means paying them in an internet proportionate to their outstanding balance or pro rata and that rule the rule of section seven zero one and the rule set forth in unequivocal language in the offering memorandum is not contradicted anywhere in the trust documents there is no provision anywhere in any of the documents transaction documents or the offering memorandum that talks about pain principle after acceleration and conflicts with that plain language you you would agree and i think the judge calibers iesus question but you would agree that if there were a conflict between the offering memo memorandum and the transaction documents the transaction documents and our understanding of those would circumstances where it's so obvious that the transaction documents did not implement the intention of the drafters as set forth in the offer memorandum that we should ignore the language in the offering memorandum about the conflict th no no no your honor i'm missing something with respect to generally speaking the offering memorandum which is the disclosure document provided to the regulatory agencies the document used to market these notes to invent most of the investors it it says you have you have to look to the contract to see the terms that we're describing to you in plain language here in contract form with this contract also does the security agreement in section eleven zero one and this really demonstrates how critical the offering memorandum is to the transaction is it says that the issuer here at any point in time without the consent of no holders can unilaterally amend the security agreement to conform to the offering memory that demonstrates how important the offering memory is of the deal it also demonstrates why in considering the factual matrix and what would have been significant to a reasonable person at the time of this transaction any investor in this transaction needed to look to the offering memorandum because that investor understood that any point in time the issuer could conform the security agreement to match up to the offer memorandum you just said that the document can be amended to conform to the offering memorandum now that you say says he offering memorandum is important the to me it says we offer a memorandum is not what governs but if the parties relevant party want it to they can amend to make it so since they haven't done i don't see why it becomes important i mean it is important in the fact that they could be made part of this of this but until it is it isn't part of  it's important because part of the factual matrix under english law and must be considered it's important because under this court's decision in this is me and this course is an inventive america in two thousand and twelve that's a different argument one who understood i just  i just was puzzled by your argument of saying it is important because it could be made part as we are for it is partly your honor an entirely fair and to your point if there was a direct conflict  section seven sets forth these bold priorities bold high level payment rules pay the ones together ones before tuesday before threes to the extent that those priorities came into conflict with some of the other rules in section five and for example the first six steps in the section five understand that that's the kind of conflict that five in seven are addressing you have to pay administrative fees before you pay the class  on the notes they all clearly provide the both before and after default and before and after acceleration if the collateral coverage tests fail the one m notes the double whammy notes get paid before the one i that's that's what judge woods held below and he was correct the issue on this appeal is whether under english law serengeti is permitted to look at two extremes of evidence or the offering memorandum to change the clear and unambiguous terms of the transaction documents but english courts like new york courts follow the basic principle that an ambiguous contract should be enforced according to their terms and this is reaffirmed in the twenty fifteen decision of the u k supreme court formerly known as the house of lords in our own versus britain here the offering memorandum cannot be read to modify the transaction documents now these double m notes which are held by american general were issued as money market securities designed to be held under f c c rules by mutual funds that had to have highly liquid securities of minimal credit risk in fact they're rated by moody's as p one which means prime one which means short term rating of superior ability and quality to pay they are different than the one i know it's and as typical in how they differ terms of the credit rating the all the class one notes have the same long term rating but the a notes have no short term rating where is the double m notes have a piece on moody's short term rating so in other words they were designed to be highly liquid and minimal credit risk now this is typical in structured finance transactions that the highest level of priority of notes gets the highest level of protection and when things go bad they get paid first this is not an unusual result to to construe this deal that way now there's no dispute that in two thousand and seven the collateral coverage test failed for the first time and starting in two thousand and seven the double i know it's got paid principal first that has been the case for ten years serengeti is trying to argue that when they accelerate section seven does not address priority as between the double m's and the a wants it just does not section five does and section five in the priority of payments is absolutely clear when the collateral coverage has failed the double m's come first and the collateral coverage has failed in two thousand and seven and the event of default which occurred in in twenty fourteen was also based on a further failure of collateral coverage you know the words the failure of the principal amount of the collateral to equal to the sum of a class one notes you make of the word together that posing counsel emphasized  class one notes is defined as follows class one notes means the class and one m m notes and the class one i know it's together it describes them as a group it does not speak to a sequence of payment as judge woods quite properly said article five or section five has a detailed sequence of payments you pay the trustee fees first you pay other expenses second you play the collateral management fee then you go into the notes and you pay in the specific order section five the word together it certainly is not a clear word as as your honor indicated i mean certainly doesn't say pro rated doesn't say sequential together just refers to a group one can look up the dictionary dictionary definitions of together i did none of them are of assistance in determining this dispute i would also point out that on the same page of the glossary i would draw the court's attention to the definition of class it's actually right above class one of the definition of class it reads as follows quote all of the securities having the same right to payment interest rate if any unstated maturity if any under that definition it's absolutely clear that the one i am notes and the one he notes are not the same class they have a different interest rate and they have and they are treated differently throughout the sec one was to take the word together and read it the way appellants would read it that would completely override multiple sections of section five in other words why limit the word together to section seven class one is referred to in many places throughout section throughout section five so really the essence of this appeal is that there's no there's no answer in sections in section seven and for your honour's to rule in favor of the appellant's they would have to do it least two things are your honour's would have to do at least two things to rewrite this disagreement first you'd have to write a priority of payments provision into section seven zero one you'd have to write in prorated if that was what you're on a thought was was was purpose your honor should not be rewriting the contract more importantly your honour's would have to ignore completely rewrite the priority payments in section five section five specifically says when there's a failure of coverage test it doesn't say before acceleration when there's a failure of coverage test which there still is today double m's get paid first you would have to either you'd have to strike that out and write a new or write a new provision insert a new provision and section five this says however notwithstanding what we just said after acceleration the priority is reversed again that's a lot of rewrit ask your on your yesterday why was where were these were two sections picked out for an english auto reply your honor i think perhaps even in two thousand and three there was a sense that the english courts treat creditors well i think at that time in two thousand and three there was the thought that creditors are treated well and in new york courts also i don't have an answer out of the record doesn't reflect that it's possible it would make them more attractive to to us invest to non u s investors or to to u k investors were there any parties you sure were well there are came in the issuers or came in and of course came in law does derive from from english law so it's possible that that's part of it that came in issuers are done specifically so non u s investors can invest so your honor may have hit the hit the point that they follow they follow english law they follow an old version of english law i believe and yes now they're independent now yes but many other commonwealth nations still following u s law or sometimes fall of an old version of english i'm just trying to find where your honor is exactly page three twenty eight section b i think that different coverage tests i think you're on of those are the interest coverage tests and i think that the principal coverage has are the ones the trigger was the question why and given what you've said just thinking about the big picture the deal has a series of sort of crises one gets worse and worse things things change but the entire thrust of the shift is in favor of the want him sent and my opponent didn't mention it but of course the explicit subord the one i know it is is in the notes themselves in the form of notes themselves which we think is a very powerful point in our favor refit dress the attorneys fees issue yes your honor  and i guess in particular what was plus size pardon me sir was well there's no question that english law governs this dispute articles five and seven and all of the notes and all of the trust granted it isn't english law governs and it is substantive here because the interest is in and the district court i think was a little bit confused on that at the issue is is this against new york public policy where it does not say it expressly and there are plenty of cases in new york  i'm less it says expressively that there should be lawyers fees we do not give it because it is against our public policy i have not found a case in new york that says expressly in a choice that the same thing applies to a choice of laws you wish and that why doesn't the general rule of new york that they will not give lawyers fees unless it says  as much here your honor i think that the simple answer is that it isn't and it is part of the agreement of the parties and in english law a contract contains the substantive right to recover legal fees in a dispute and new york courts always will enforce a contractual agreement to give attorneys fees if it makes that with respect to lawyers fees they've always wanted it to be express and your honor i can say is that every english law contract if put into litigation results in your recovery of fees everyone knows that who's had anything to do with english litigation it's it is it is a feature of english law and therefore they are expressively message but your honor there's no decision by this court there's no decision by the new york court of appeals to certify although you could do that your honor i've done that before but last time that happened in this guard we went all the way to michigan giving us a free ride yes if i'm wrong yes you have no problem with certification no your honor i think the new york court of appeals would be very interested in this issue it's an important issue we have five judges in the southern district who ruled in our favor on this issue and they're good judges judge hey judge cotto judge coat and judge martin they all ruled that english law contracts mean recovery of legal fees would rule the other way and yes but as you are said i think you got the subsidy versus they chose english law was really had nothing to do with this that it had to do with the fact that they may view being wish courts as more favorable to creditors was a matter really thinking about this thinking about the question of counsel for use your honor all i can say is that in this day and age there are two centers of law and courts in this world that compete for transactions  structured finance and other sophisticated financial instruments and one is this court and the new york courts and the other one of the courts of london so i think that to enforce english law on this transaction when it's clearly governed by english law seven the mighty midget's case where the new york court of appeals has held that the new york rule reflects a quote flex of fundamental legislative policy decision that say for particular exceptions or when the parties have entered into a special agreement it is undesirable that the skirt submission of grievances to traditional determination and that in providing free are more equal access to the courts the present system promotes democratic and libertarian principles that's a pretty strong statement yes you're on but i would give you the same answer that i did to judge calibers see which is that this is an agreement by the party virtue of it's in english law it doesn't say that we law with respect to most of a contractual reasons because english courts are as you said particularly good people to write whatever but did they also clearly intend to do this which is so strongly against new york policy unless we mean it literally that's that's what question your honor all i can say is that i've seen a lot of english law contracts and we win but it's not an english law a contract is the contract govern predominately by and presumptively by new york law it's a contract that has a mandatory new york then you close any dispute relating to the north lake transaction must be brought in the courts of new york it would be not just public policy it would be unprecedented in this type of case to infer an unmistakable intent to it to incorporate english law fee shifting principles in a contract that not only govern predominantly by new york but has a mandatory new york who are its provision i mean there's a lot of new york here right in the is a lot of new york here ultimately that that's why we didn't argue for fee shifty because this is not even before you get to the procedural substantive analysis judge woods in gays and this is not a good law contract that there's no conflict there's a new york courts choice of law i'm sorry a new york mandatory venue clause here for disputes it's not an appropriate case fifty if i may that your honour's i'd like to address one thing mister hawkins said about the restrictive par value test your honor was looking at the language saying well why would the iambs agree to for this restrictive par value test and mr hawkins said well it's because that was an interval a test no it's not it was just a coverage test that applied to a slightly different circumstance and the reality is the relative priority between the iambs in the i a s the rather's agreement very dramatically they were parry pursue for all purposes except were other otherwise specified and the way they were specified in article seven was to be paid together i also want to address i think mr hawkins answered your question and and resolved i think this dispute he said well look it would it would lead to very odd results if you read the defined term class one and and and notes together into the payment priorities in section five that would lead to results that might be true and that's why if you read section five in every single instance the drafters use they didn't use class one notes they used the class one day and the class one and notes together i'm sorry independently they are they actually spelled out the class one day notes and the class one knows because by using the defined term class one knows there are implicit implications for the contract provision and it's those implications in section seven as as shown in distinction from the the the drafters language in section five that show why we need to forward section seven and its use of the term together some meaning at a bare minimum we're talking about the plain language of section seven as confirmed by the offering memorandum this is not a case that should have or could have been language for saying that section seven when you look at the word together the plain language taken with the offering memorandum the result should be reversed because there's really no other way of looking at it but at a minimum that's a reasonable competing interpretation that would that requires extrinsic evidence further analysis that's also true under english law which requires consideration of the factual it's reversible error not to consider the fact for matrix it didn't happen here we need to would you to go back to the attorneys fees issue if we get to that issue would you object to certification you have a problem i would you honor because i think it would be certainly if it's the court's pleasure it can be done i don't think it's an appropriate case it's a case of it's not an english law contract every other decision where attorneys fees were awarded were governed by english law governed by in the entirety none of those cases had mandatory new york choice of venue provisions as this subtext of new york law yeah i think it's the wrong test case although it intellectually interesting isn't that a question for appropriate for reasons you give but wherever it is ultimately a case which new york wants this week or whether they want to wait for another one is something that really is up to them they don't need to accept certification