## Facts

- Jamaica ceased paying principal on foreign bank debt in mid-1983 after economic deterioration; its foreign bank debt had been rescheduled in 1978, 1979, and 1981 with creditor consent.
- On June 27, 1984, Jamaica and a syndicate of 113 banks executed a fourth rescheduling agreement (1984 Agreement) providing for principal repayment in 17 quarterly installments starting March 15, 1986.
- In August 1984, Continental Illinois assigned A.I. Credit Corporation (AICCO) 90% of its rescheduled debt (about $10 million principal) and related rights and obligations.
- The transfer documents incorporated the 1984 Agreement and provided that AICCO would be treated as a “Bank” under that agreement, “subject to” the 1984 Agreement as it could later “be amended, modified or supplemented.”
- By early 1985 Jamaica could not repay principal under the 1984 schedule, leading to a fifth rescheduling in 1985 and a sixth rescheduling on April 30, 1987, with quarterly payments beginning October 15, 1988.
- Most syndicate banks executed the later reschedulings; AICCO did not sign the 1985 or 1987 agreements.
- AICCO demanded payment under the 1984 schedule and sued; Jamaica contended AICCO was bound by the later reschedulings under the 1984 Agreement and the assignment terms.

## Issues

1. Whether the 1984 Agreement and assignment terms bound AICCO to later rescheduling agreements (1985 and 1987) even though AICCO did not sign them.
2. Whether AICCO retained an individual right to enforce the original 1984 principal repayment schedule notwithstanding the collective rescheduling framework.
3. How the “subject to” clause incorporating future amendments should be construed in allocating rights and obligations to an assignee.

## Decision

- The court ruled for Jamaica on the central contract question and rejected AICCO’s demand for immediate principal payments under the 1984 schedule.
- The court held that AICCO, as an assignee treated as a “Bank” and expressly subject to future amendments, was bound by the later reschedulings reached within the syndicate structure.
- Jamaica’s failure to pay principal under the original 1984 timetable was not a breach because the operative repayment terms had been rescheduled.
- The court’s ruling effectively disposed of AICCO’s claim for immediate principal recovery (granting Jamaica summary judgment in substance).

## Legal Principles

- An assignee generally takes the assigned contract interest subject to the assignor’s contractual rights and obligations, including agreed mechanisms for amendment.
- Where an assignment provides that the assignee’s interest is “subject to” a rescheduling agreement “as ... may be amended, modified or supplemented,” the assignee is bound by subsequent amendments made pursuant to that framework, even without signing the later agreements.
- In syndicated sovereign debt restructurings, courts may enforce contractual provisions designed to facilitate collective modification and prevent holdout creditors from unilaterally enforcing superseded payment schedules.
- Contract interpretation is informed by the transaction’s commercial setting, including the parties’ awareness of repeated prior reschedulings and the expectation that repayment terms could change through agreed syndicate processes.

## Conclusion

The court held that AICCO’s assignment placed it within the syndicated rescheduling arrangement and, by accepting contractual language subjecting its rights to future amendments, AICCO was bound by later rescheduling agreements and could not compel principal payments under the original 1984 schedule.


A.I. Credit Corp. v. Gov’t of Jam., 666 F. Supp. 629 (S.D.N.Y. 1987)