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Sigma case to decide on SIV creditors' claims
3 Jul 2009Lenders caught up in the meltdown of toxic assets during the collapse of structured investment vehicles in the financial crisis, are to learn what rights they have to claim back their money.
The House of Lords is to rule in the case of Sigma Finance, one of the biggest SIVs dealing in collateralised debt obligations and other structured finance instruments. At one stage the Sigma SIV had assets of $50 billion. By the time of its collapse last autumn those assets had dwindled to $2 billion with liabilities owed to lenders of $6 billion.
SIVs collapsed when liquidity dried up; they had borrowed heavily in the short-term money market to buy higher-yielding assets elsewhere.
The Law Lords must decide whether creditors should be paid as their claims become due or all treated equally.
