Financier ordered to repay €172m after contract failures

A financier and his associated companies have been ordered to pay €172 million over contract errors and their failure to meet agreed deadlines.

The dispute involved Heritage Travel and Tourism Ltd v Lars Windhorst & Ors.

The parties had entered into commercial agreements that led to Heritage providing large short-term loans to Windhorst and several companies associated with him. Windhorst and the associate companies failed to perform their obligations under the agreements.

In February 2020 the parties reached a settlement, but Windhorst failed to comply with it.

Heritage began proceedings, which resulted in a settlement agreement obliging Windhorst to pay a first amount of €55 million by the end of June 2020, a second amount of €69 million by February 2021, and a daily lump sum payment that accrued pro rata while the second amount remained unpaid.

The settlement contained an acceleration clause allowing Heritage to serve notice that, if Windhorst failed to pay the first amount on time, both amounts would become immediately due and payable, plus the daily lump sum calculated up to February 2021.

Windhorst and his associated companies failed to meet their obligations.

They argued in court that Heritage had always understood that their ability to repay rested on a successful raising of funds through third-party investment that was expected to complete in June 2020 but failed.

They submitted that the settlement was unenforceable because, among other things, they agreed it under economic duress because Heritage, in breach of contractual confidentiality obligations, were threatening to tell potential investors of the failure to meet payment obligations.

The High Court found in favour of Heritage.

It held that Windhorst had no real prospect of establishing a defence based on economic duress. Heritage had ceased to be subject to any contractual confidentiality obligations before the settlement was agreed.

In exceptional circumstances, the court might impose a duty of confidence extending the scope of contractual confidentiality obligations, but there were no such circumstances in this case. The parties were experienced commercial entities.

The alleged threats were simply threats by Heritage either to enforce their contractual rights or to do things that they were not contractually prohibited from doing. They were lawful threats coupled with a demand motivated by commercial self-interest. Such conduct was generally regarded in law as wholly legitimate.

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Heritage Travel and Tourism Ltd v Windhorst
Queen’s Bench Division (Commercial Court)
27 August 2021
[2021] EWHC 2380 (Comm)