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Re BIS Finance Pty Ltd

Re BIS Finance Pty Ltd

Case [2018] NSWSC 3 8 January 2018

Debt-to-Equity Swap

Standstill Period

Variation of Loan Documentation

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of BIS Finance Pty Limited; In the matter of Artsonig Pty Limited [2018] NSWSC 3
Hearing dates: 15 December 2017
Decision date: 08 January 2018
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
The Court approves the creditors’ schemes of arrangement pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth).

Catchwords: CORPORATIONS — Scheme of arrangement — Application for approval – where two interdependent creditors’ schemes proposed to effect broader restructuring — where schemes provide for debt-to-equity swap, standstill period and variation of loan documentation.
Legislation Cited: - Corporations Act 2001 (Cth), Ch 6, s 411
- Securities Act 1933 (US), s 3(a)(10)
Cases Cited: - Fiducian Portfolio Services Ltd v Fiducian Investment Management Services Ltd (No 2) [2015] FCA 95; (2015) 228 FCR 587
- Re Atlantic Gold NL (No 2) [2014] FCA 869
- Re Atlassian Corporation Pty Ltd [2013] FCA 1451
- Re BIS Finance Pty Ltd [2017] NSWSC 1713
- Re Boart Longyear (No 2) [2017] NSWSC 1105 (2017) 323 FLR 241; 122 ACSR 437
- Re Centro Properties Ltd (in its capacity as responsible entity of Centro Property Trust) [2011] NSWSC 1465; (2011) 86 ACSR 584
- Re Challenge Bank Ltd (1995) 19 ACSR 421
- Re Nine Entertainment Group Ltd (No 2) [2013] FCA 40
- Re Permanent Trustee Co Ltd [2002] NSWSC 1177; (2002) 43 ACSR 601
- Re Recall Holdings Ltd (No 2) [2016] FCA 419
- Re Seven Network Ltd (No 3) [2010] FCA 400; (2010) 267 ALR 583; 77 ACSR 701
Category: Procedural and other rulings
Parties:
Proceedings 2017/333466
BIS Finance Pty Limited (Plaintiff)
Proceedings 2017/333478
Artsonig Pty Limited (Plaintiff)
Representation:
Counsel:
J Sheahan QC/T L Wong (Plaintiff)
M Izzo (Participating PIK Noteholders)
M Oakes SC/R Alkadamani (AMAL Management Services Pty Ltd as agent on behalf of lenders under the Syndicated Facility Agreement dated 12/12/12 (as amended)
Solicitors:
Gilbert & Tobin (Plaintiff)
Arnold Bloch Leibler (Participating PIK Noteholders)
Herbert Smith Freehills (AMAL Management Services Pty Ltd as agent on behalf of lenders under the Syndicated Facility Agreement dated 12/12/12 (as amended)

File Number(s): 2017/333466; 2017/333478

Judgment

Background

By my judgment delivered on 17 November 2017 ([2017] NSWSC 1713), I made orders in proceedings no. 2017/00333466 that BIS Finance Pty Ltd (“BIS Finance”) convene a meeting of its creditors to consider and, if thought fit, approve a proposed scheme of arrangement (“Senior Scheme”) between BIS Finance and those persons who are "Facility A2 Lenders", "Facility B Lenders" and "Facility C1 Lenders" for the purposes of the Syndicated Facility Agreement dated 12 December 2012 (as amended and acceded to from time to time) (“SFA”) between, amongst others, BIS Finance, Thornberry Finance Pty Ltd (“Thornberry Finance”), AMAL Management Services Pty Ltd, and AMAL Security Services Pty Ltd (“Senior Scheme Lenders”); and "Hedge Counterparties" for the purposes of the deed entitled "Intercreditor Deed" dated 16 May 2007 (as amended from time to time)…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re BIS Finance Pty Ltd

Details

AGLC: Re BIS Finance Pty Ltd [2018] NSWSC 3
Case: [2018] NSWSC 3
Decision Date: 08 January 2018

CaseChat Overview and Summary

Re BIS Finance Pty Ltd involved the company, BIS Finance, and its creditors in the Federal Court of Australia. The company was facing financial difficulties and proposed two interlinked restructuring schemes to address its debts. The primary dispute centred around the court's approval of these schemes, which included a debt-to-equity conversion, a standstill period, and changes to the loan agreements. Creditors were concerned about the fairness and viability of the proposed restructuring, leading to a challenge against the court's authority to approve the schemes.

The court had to decide whether the proposed restructuring was fair and equitable to all parties involved and whether the court had the jurisdiction to approve the schemes. Additionally, the court needed to consider whether the proposed changes to the loan documentation and the debt-to-equity conversion were reasonable and in the best interest of the company and its creditors. The court also had to determine whether the proposed standstill period was necessary and appropriate for the restructuring process.

The court found that the proposed restructuring was fair and equitable to the creditors and that the court had the jurisdiction to approve the schemes. The court reasoned that the debt-to-equity conversion and changes to the loan documentation were reasonable, given the financial circumstances of BIS Finance. The court also held that the proposed standstill period was necessary to allow for the restructuring to be implemented effectively. The court approved the restructuring schemes, noting the importance of a comprehensive and fair approach to corporate restructuring. The final orders included the approval of the restructuring schemes and the implementation of the agreed terms.

Orders