Boart Longyear – the recent appeal decision
The proposed schemes of arrangement for certain creditors of Boart Longyear Limited (BLY) – following very recent decisions in New South Wales at trial and now appellate level – are significant for restructuring and distressed investing professionals transacting in Australia. In particular, those decisions explore the principles for separation of affected creditors into classes, and highlight that different treatment of creditors in the same class does not of itself lead to division of those differently treated creditors into separate classes.
Need to know
The scheme proposed by BLY for its senior secured creditors involved one group of senior-ranking lenders (led by entities managed by Centerbridge) voting in the same class as another group of senior-ranking lenders (including entities managed by First Pacific) on whether to approve the scheme. This was despite the Centerbridge entities receiving different consideration under the scheme. First Pacific objected, contending that this different treatment ought to see Centerbridge vote in a separate class, which would then disable Centerbridge from cramming down First Pacific through the scheme. That objection was rejected at first instance and again on appeal. Read more…