Dan Alderson

Will Macadam

Tresidor Investment Management has stepped into the ring on Ardagh CDS, filing a formal counter-challenge to Arini Capital Management’s objection to the inclusion of the Irish packaging firm’s senior unsecured notes (SUNs) in CDS auction deliverables.

The gloves were already off, but with Tresidor’s response now formally on the table, the Ardagh CDS saga has fully embraced the feel of a bare-knuckle bout: two fighters circling in the mud, cheered and jeered by a crowd that knows the outcome matters far beyond this one contest.

On one side stands Arini, arguing that the SUNs should be struck from the list of deliverable obligations because their outstanding principal balance was already zero when the restructuring credit event was triggered.

On the other is Tresidor, swinging back hard in defence of inclusion, accusing the challenge of logical leaps, misreadings of the external review, and a dangerous attempt to collapse distinct parts of the CDS architecture into a single, unworkable theory.

Tresidor’s filing opens with an unusually blunt tone, asserting that Arini’s challenge “contains multiple logical non-sequiturs” and “quotes selectively from the external review panel decision in attempting to justify exclusion of the SUNs”, before concluding that “none of the grounds outlined in the challenge provide a valid reason for withdrawing the SUNs from the list of deliverable obligations”.

From the outset, the response frames the dispute not as a close call on interpretation, but as a category error: Arini, Tresidor argues, is taking a decision about when a credit event occurred and trying to repurpose it to determine how settlement mechanics should work, despite the two being governed by different articles of the ISDA Definitions and designed to perform different functions.

At the core of Tresidor’s case is a sharp insistence on the asymmetry between Article IV, which governs credit events, and Article III, which governs deliverable obligations and outstanding principal balance (OPB). The external review panel, Tresidor stresses, was asked a “narrow question of when a restructuring credit event occurred,” not to determine whether the SUNs had an OPB for settlement purposes.

“The decision covered the timing of a credit event under Article IV,” the filing states, “and not a determination of an OPB under Article III.”

By conflating the two, Tresidor argues, Arini is effectively asking the EMEA Determinations Committee (DC) to undo the structural separation that sits at the heart of the CDS framework.

That distinction matters because, in Tresidor’s telling, the external review’s finding rested on the existence of an agreement to restructure, not on the occurrence or implementation of the restructuring itself. The panel was explicit that “an agreement can exist prior to implementation”, and equally explicit that this interpretation could lead to scenarios where a credit event occurs even if the transaction is never consummated.

Tresidor seizes on that point, arguing that if the terms of the SUNs had truly already been amended on 29 September 2025, as Arini contends, then the restructuring would have been implemented at that moment and the panel referral would have been redundant.

“If the TSA and consent solicitation had actually amended the contractual terms of the SUNs,” Tresidor writes, “the restructuring would have been ‘implemented’ at that moment. This is the exact opposite of the panel’s core finding.”

This line of attack goes directly to the so-called Schrödinger’s obligation paradox that animated Arini’s challenge: the idea that the SUNs cannot coherently be treated as both bound to equitisation for credit-event purposes and yet still outstanding for settlement. Tresidor rejects the paradox outright, arguing that it only arises if one insists on reading Article IV and Article III through the same interpretive lens.

The uncertainty identified by the panel is not a bug, in this view, but a feature of the definitions. Credit events can occur in advance of final outcomes, while OPB is concerned with whether claims have in fact been compromised or impaired as of the event determination date. As Tresidor puts it, “Credit events and the definition of OPB play different roles in the ISDA architecture.”

A major plank of Tresidor’s response is its attack on Arini’s emphasis on collective action clauses. Arini argued that the existence and operation of CACs meant the SUNs were already subject to a binding reduction in principal, rendering them contingent and non-deliverable. Tresidor counters that this radically overstates what CACs do. The restructuring, it argues, was “driven by external factors (the TSA and Consent Solicitation Agreement) that were not ‘pursuant to the terms of the obligation[s]’ of the SUNs.”

In other words, the CACs were amendment machinery, not self-executing principal-reducing provisions. If the principal reduction truly flowed from the terms of the obligation alone, Tresidor argues, the TSA and consent solicitation would not have been necessary at all.

This leads into a broader warning about the dangers of expanding the meaning of “terms of the obligation” beyond the four corners of the governing instrument. Tresidor characterises Arini’s approach as “dangerously overexpanding” the concept to include a shifting constellation of interim agreements, steps and understandings.

Such an approach, it argues, would make the determination of OPB “practically unworkable”, forcing the DC into open-ended factual inquiries about every external influence that might one day lead to a principal reduction. Legislative changes, court orders or government actions may bind all holders, Tresidor notes, but are not treated as part of the obligation’s terms. The same logic, it says, should apply to TSAs and consent processes.

The response also leans heavily on what it sees as the internal logic of the restructuring timeline. If, as Arini contends, the SUNs’ principal had already been extinguished by 29 September, then the subsequent steps taken to amend the indentures and secure court sanction in November would have been pointless.

Tresidor highlights the panel’s acknowledgement that a restructuring credit event can occur even where “the restructuring might never be implemented”, and spells out the counterfactual: had Ardagh entered insolvency before the supplemental indenture was executed, the TSA would have terminated and the SUNs would have remained valid claims for their full face amount. That possibility, Tresidor argues, is incompatible with the idea that principal had already been reduced to zero.

Even if the DC were unconvinced by the earlier arguments, Tresidor points to a built-in safeguard in the ISDA definitions: the “permitted contingency” exception. Under Section 3.11(b), any reductions in OPB that arise from actions “within the control of the holders of the obligation or a third party acting on their behalf” are explicitly excluded from the calculation. In Ardagh’s case, the SUN holders led, negotiated, and agreed the restructuring, and the TSA and consent solicitation were simply mechanisms for them to exercise those rights.

That means any principal changes flowing from collective voting procedures should be ignored when determining OPB. Arini’s challenge, Tresidor argues, asks the DC to erase this history and focus only on the new obligations imposed on the SUN holders — an approach that is artificial and unsupported by the very definition of a permitted contingency.

The restructuring, Tresidor argues, was led, negotiated and agreed by SUN holders exercising their contractual rights. On that basis, “any changes in principal occurring as a result of the use of collective voting procedures are ignored in calculating the OPB.” Arini’s challenge, Tresidor says, asks the DC to ignore that history and focus only on the forward-looking consequences, an approach it calls “artificial” and unsupported by the definitions.

The final rounds of Tresidor’s submission are devoted to settlement mechanics and asset package delivery (APD). Here, the response pushes back against any suggestion that delivering post-reorganisation instruments is somehow forbidden.

Citing established European practice, Tresidor argues that allowing delivery of instruments that reflect the value of pre-reorganisation obligations is both orthodox and necessary to achieve a representative auction. To deny that flexibility in a restructuring context, it warns, would create artificial distinctions between bankruptcy and restructuring credit events and risk producing outcomes that fail to reflect the economic reality experienced by creditors. The CDS contract, Tresidor concludes, “was designed to payout in these situations”.

Taken together, Tresidor’s response is a full-throated defence of a purposive yet text-anchored reading of the CDS framework. It accepts the external review’s conclusions on timing, but resists what it sees as an attempt to weaponise those conclusions to strip settlement of substance.

Whether the DC is persuaded will determine not just who lands the winning blow in this particular bout, but whether Ardagh becomes a case where CDS ultimately stands up as a hedge, or one where legal symmetry is achieved at the cost of economic coherence. For now, the fighters are still on their feet, the crowd is leaning in, and the bell has yet to ring on what may be the decisive round.

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Tresidor v Arini — The big fight for Ardagh and the soul of CDS

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