Separate creditor meetings for equal-ranking creditors—A new sort of cram down for dissenting creditors? (Re Madagascar Oil Ltd)
Restructuring & Insolvency analysis: This case concerns an application by the company to convene meetings of two individual creditors, each of whose claims are pari passu ranked and arise under the same financial instrument, pursuant to section 901C of the Companies Act 2006 (CA 2006) and to approve a restructuring plan under CA 2006, Pt 26A. It considers the different roles of those creditors and their subsequent treatment in relation to the convening meetings, and what should be done practically to manage a contested restructuring plan application. It also considers the principles of Condition B of CA 2006, s 901A(3)(i), which requires the company to propose a ‘compromise or arrangement’ with its creditors, namely whether there was sufficient ‘give and take’ in the restructuring plan. The court held that due to their differing economic roles, differing forms of consideration and their differing future role in the company's future, together with the fact of their disagreement in principle to the restructuring plan, it was appropriate to place them in separate creditor meetings to vote on the restructuring plan. The court also approved extensive case management directions in advance of the sanction hearing. Written by Stephen Alexander, partner at Mourant and Roxanna Lackschewitz-Martin, associate at Mourant.