Standstill, then stand down: the simple story behind Unik v Catbalogan

After its subsidiary defaulted on the repayment of its bonds, Unik agreed not to fight enforcement in return for time to refinance. It then did exactly that, issuing proceedings in Paris that sought to unwind enforcement steps taken by Catbalogan. Both the High Court and the Court of Appeal held Unik to its bargain, requiring it to withdraw its Paris proceedings.

Catbalogan Holdings S.à.R.L. v Unik [2025] EWHC 2673 (Ch); Unik Bond S.A. v Catbalogan Holdings S.à.R.L. [2025] EWCA Civ 1594

Key takeaway

Clear drafting, read in its commercial context, will be enforced by the English courts. Where contract language plainly sets out what parties can and cannot do (such as agreeing not to challenge enforcement) English courts will hold sophisticated parties to that allocation of risk without requiring the inclusion of any “magic words”. The courts applied the familiar principle that the more valuable the right being given up, the clearer the waiver must be: but clarity in context, not absolute linguistic perfection, is what matters.

Background

Unik was the ultimate owner of 50% of the shares in a hotel group and had granted security over such shares to secure repayment of French law governed bonds issued by a group entity. The bonds, held  by Catbalogan (as successor to the original bondholder), fell into payment default when they were not repaid on 6 September 2024. Enforcement could have followed immediately. Instead, the parties agreed a standstill on 11 November 2024. In exchange for more time to refinance, Unik and the other “Company Parties” acknowledged the existing default and their insolvency position, and expressly committed to co‑operate with, and not contest, any enforcement action taken once the standstill expired. These arrangements were documented in agreements governed by English law (Standstill Agreements).

When refinancing of the bonds did not materialise, on the instructions of the bondholder the security agent enforced. On 28 May 2025, it exercised rights under various Luxembourg and French law security documents, resulting in a transfer of the shares in the hotel parent entity and a change of management at the hotel company.

Unik then issued proceedings in the Paris Commercial Court seeking to unwind those enforcement steps. Catbalogan responded by commencing proceedings in London to compel Unik to withdraw the Paris claim, relying on the co‑operation and no‑challenge wording set out in the Standstill Agreements entered into only months earlier.

On 16 October 2025, the High Court held that Unik had breached its obligations in the Standstill Agreements and granted a declaration and final injunction requiring it to withdraw the Paris proceedings. Unik appealed. On 9 December 2025, the Court of Appeal dismissed the appeal, upholding the High Court’s analysis in full.

What did the relevant Standstill Agreement say?

The courts’ analysis centred on two key provisions of the Standstill Agreements. These were:

Clause 5(d): the no‑challenge and release promise

Clause 5(d) stated that no Company Party (which included Unik) “shall contest, or seek to contest or otherwise prevent” the exercise of rights under any Finance Document, and that they irrevocably released any rights or claims “now or in future” in that regard.

Unik argued that the clause attempted to waive a fundamental right of access to a court and that such a waiver required wording admitting of no other meaning. It also said the phrase “agree and acknowledge” created only a contractual estoppel, not a forward‑looking obligation, and that clause 5(d) should be read narrowly to cover only the valuation expert example specifically mentioned within it.

The courts rejected these arguments. Applying the principle that the clearer the right being surrendered, the clearer the language must be, they held that the clause was indeed clear enough in context - a commercial standstill that explicitly anticipated enforcement occurring immediately afterwards. The imperative wording (“shall not contest”) created a binding, future‑facing promise, not merely an estoppel, and the valuation point was an illustration, not a limitation. By initiating proceedings in Paris to challenge enforcement, Unik had breached clause 5(d). The High Court granted injunctive relief, and the Court of Appeal upheld that outcome.

Clause 5(a): the co‑operate promise

Clause 5(a) required the Company Parties to “undertake to co‑operate fully … in relation to any Enforcement Action … at any time.”

Unik argued that “co‑operation” applied only before enforcement was taken and could not prevent it from litigating afterwards. The courts disagreed. Co‑operating “fully” and “at any time” necessarily includes not undermining enforcement steps once taken. If a party could immediately sue to unwind the steps it had promised to co‑operate with, the clause would have no commercial purpose. Unik’s Paris claim breached this obligation as well.

Why does this case matter?

• For lenders:
  The decision confirms that carefully drafted no‑challenge and co‑operation clauses work. Courts will enforce them as written, even where borrowers initiate proceedings in another jurisdiction. They support injunctive relief to restrain foreign litigation and protect enforcement processes from disruption.
• For borrowers and sponsors:
  These clauses are not window‑dressing. When agreed in the context of a standstill or any other restructuring arrangement, courts will not permit narrow readings or estoppel‑based manoeuvres to escape their effect. If obligor parties want to preserve specific rights to challenge enforcement, they must negotiate clear carve‑outs at the time, not rely later on interpretive arguments.