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Noble Group Limited: Schemes of Arrangement and COMI

In a recent decision of the English High Court, a creditors scheme of arrangement sought by a Bermuda company, Noble Group Limited, was approved.

Of relevance to Cayman practitioners, the Court re-affirmed the key factors to be considered before a scheme may be sanctioned:-

  1. The provisions of the relevant statute must be complied with, including that the relevant statutory voting majorities have been achieved. In England, as in the Cayman Islands, a majority in number holding at least 75% in debt value of each class of scheme creditors must approve the scheme;
  2. The classes of scheme creditors must be fairly represented at the creditor meetings. In this case, concerns had been raised by the Judge regarding various (not insignificant) fees that had been (or would be, upon sanction of the Scheme) paid to some, but not all, scheme creditors;
  3. The Scheme must be a fair arrangement and one that an intelligent and honest creditor could reasonably approve acting in his own interests; again there were some issues concerning fairness, including: (i) the division of scheme consideration between creditors that would be indirectly participating in new facilities to be entered into by the ‘new’ Noble Group post restructuring and those that would not be so participating; and (ii) the release by scheme creditors of claims against third parties;
  4. There must be no ‘blots’ or defects in the scheme.

Of further relevance to Cayman practitioners, the Court also considered issues arising as a result of the international nature of the scheme, including whether (as the Court ultimately held) the company had a ‘sufficient connection’ to England. The jurisdiction of the English courts to sanction overseas incorporated company schemes is similar to the jurisdiction of the Cayman courts in this respect, insofar as the latter have a wide statutory jurisdiction to sanction a scheme. In other words, this decision in Noble is consistent with the Cayman Courts approach in the recent Ocean Rig case.

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