## Facts

- IFE Fund SA (IFE), an investment fund, participated in a mezzanine-tier syndicated financing connected to Autodis SA’s acquisition of Finelist Group plc.
- On May 30, 2000, IFE purchased Autodis bonds and warrants from Goldman Sachs International (GSI) for €20 million.
- GSI, acting as arranger and underwriter, circulated a Syndicate/Information Memorandum (SIM) to potential participants, including IFE.
- The SIM contained prominent “Important Notice” disclaimers stating GSI made no representation or warranty (express or implied) as to the accuracy or completeness of the information, accepted no responsibility for it, and undertook no obligation to update or notify participants of later information.
- IFE also received due diligence material, including Arthur Andersen reports dated May 19 and May 26, 2000.
- Finelist later collapsed; its published accounts were misleading due to conduct that presented a false financial position, and the group entered receivership in October 2000.
- IFE alleged that after distributing the SIM and Andersen reports, GSI obtained additional adverse financial information but did not disclose it before IFE committed to the investment.
- After the transaction, IFE and others entered a French-law Bondholders’ Agreement containing a clause asserted to bar proceedings connected to the acquisition and its aftermath.
- The litigation was tried on liability only; IFE sued for statutory misrepresentation and negligence (negligent misstatement and an asserted duty to inform).

## Issues

1. Whether providing the SIM and accountants’ reports impliedly represented that GSI was unaware of facts making the financial information materially incorrect or unreasonable, and whether any such representation continued until completion.
2. Whether GSI owed IFE a duty of care in negligence, either not to make negligent misstatements or to disclose later-acquired adverse information before completion.
3. Whether the SIM “Important Notice” and related wording negated the existence of any implied representation or duty of care, or instead operated as exclusion/limitation clauses subject to statutory controls.
4. Whether the Bondholders’ Agreement (under French law) barred or released IFE’s claims against GSI.
5. Whether statutory controls on exclusion terms applied (including reasonableness-type constraints) to the SIM wording relied upon by GSI.

## Decision

- The court dismissed IFE’s claims in full.
- The court held GSI made no implied representations of the kind pleaded, given the SIM’s express “no representation/no responsibility” language.
- The court held GSI owed no duty of care to IFE in negligence, including no duty to inform or update participants about later-acquired information.
- The SIM wording was characterized as defining the parties’ relationship and negating any assumption of responsibility, not as excluding liability for an otherwise-existing duty; as a result, statutory controls directed at exclusion/limitation clauses were not engaged on the court’s analysis.
- The Bondholders’ Agreement provided an additional contractual barrier to the claims.

## Legal Principles

- Clear, prominent “no representation/no responsibility/no update” wording in an information memorandum can prevent a court from inferring implied representations about the arranger’s knowledge of undisclosed adverse facts.
- In a syndicated financing, an arranger does not ordinarily owe participating institutions a duty of care regarding informational accuracy or disclosure absent an advisory relationship or an assumed responsibility.
- Contractual terms may be treated as going to the existence of a duty or representation (by negating reliance/assumption of responsibility) rather than as terms excluding or limiting liability for a duty that already exists.
- When the contractual framework allocates responsibility to participants to make their own assessment, it weighs strongly against finding proximity and “just and reasonable” grounds for imposing a negligence duty.
- A separate post-transaction agreement governed by foreign law may independently bar proceedings, depending on its proper construction and effect.

## Conclusion

The court held that the arranger’s express “no representation” and “no duty to update” provisions in the syndication materials prevented implied representations and negated any assumption of responsibility, so no misrepresentation or negligence duty arose and the claims were dismissed, with the Bondholders’ Agreement providing further support for a contractual bar.


IFE Fund SA v. Goldman Sachs Int’l, [2006] EWHC 2887 (Comm) (Eng.)