English Schemes And Sufficient Notice
Key Points
Court held notice to scheme creditors (here two weeks) was not sufficient in light of complexity of scheme Court also highlighted deficiencies in supporting documentation The Facts
In 2001 Indah Kiat (the Company), part of the APP group of companies, defaulted under the terms of two series of notes with a combined value of $350m (the Notes), both guaranteed by the Company's parent. Litigation ensued in respect of the Notes and resulted in a number of judgments from both the New York and Indonesian courts.
In 2015, APP Investment Opportunity LLC (APPIO) took an assignment from the trustee of the Notes and commenced enforcement action against the Company. The Company subsequently proposed a scheme which, in exchange for the release of the Company and its parent from obligations under the Notes, gave scheme creditors the option of either: (i) an immediate cash payment of 25% of the value of the Notes (subject to an $8m cap); or (ii) an immediate cash payment of 13.5% of the value of the Notes and new unsecured notes issued by the Company's parent.
Scheme creditors were given two weeks' notice of the court hearing to convene a meeting of creditors (the Company having categorised all creditors as forming part of the same class). APPIO opposed the convening of any meeting on the basis of insufficient notice and sought an adjournment of six weeks.
Decision
Snowden J granted the adjournment sought by APPIO on the basis that insufficient notice had been provided to scheme creditors in light of the complexity of the proposed scheme, a view reinforced by the fact that...
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