The Court of Appeal reversed the decision of Jones J in Weavering Macro Fixed Income Fund Limited -v- Peterson and Ekstrom  (2) CILR 203, which had held that the Directors of the Weavering Macro Fixed Income Fund (the “Fund”) were liable for willful neglect or default. The Court of Appeal decision set aside the US$111 million Judgment of the lower court, which had been obtained by the Liquidators of the Fund against the Directors.
The Fund collapsed into insolvency when it was discovered that its net asset value (“NAV”) comprised fictitious interest rate swaps with the related Weavering Capital Fund based in the BVI. These swaps were designed to conceal the fact that the Fund had suffered substantial losses. The allegation against the directors was that they ought to have discovered the identity of the counterparty to the swap contracts, and that if they had done so, then they would have appreciated that the values attributed to those contracts could not be justified with the result that the Fund would have been put into liquidation in November 2008 and subsequent redemption payments to investors in the sum of US$111 million would not have been paid. These payments are now irrecoverable.
To continue reading full articles in PDF format:
Weavering Macro Fixed Income Fund Ltd. -v- Peterson and another (12 February 2015)