IFRS 2: hedging the risk in BNY case

Communication about derivatives and hedging needs to improve so investors understand the risks under IFRS 7 Financial Instruments: Disclosures as highlighted in BNY Corporate Trustee Services Ltd v Eurosail UK (2007-3BL PLC and others [2011] EWCA Civ 227)

The judgment in the case of BNY Corporate Trustee Services Ltd v Eurosail UK (2007-3BL PLC and others [2011] EWCA Civ 227) is a useful victory for common sense and clarifies the meaning of balance sheet insolvency, welcomed by those in the corporate and structured finance arena.

The key question at the heart of the case was the interpretation of the balance sheet test for insolvency at s. 123(2) of the Insolvency Act 1986, i.e. when is a company balance sheet insolvent?

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