Ashurst Restructuring Roundup
12 April 2024
A-Cap Energy Limited [2023] FCA 1356 ("A-Cap") and Symbio Holdings Limited [2024] FCA 40 ("Symbio")
The main communication with scheme creditors is the explanatory statement approved at the first court hearing.
However, there can be other communications which are proposed to be sent to creditors.
In the case of other communications which are known at the time of the first hearing, they can include:
The terms of those communications should be brought to the attention of the court at the first court hearing.
Where the "intended communication is inconsistent with or qualifies the explanatory statement the court has approved" consideration will need to be given to applying for orders approving both the terms and the manner of publishing the communication if a supplementary explanatory statement is not required; see Vita Group Ltd [2023] FCA 400 (at [32]) and Symbio (at [20]).
Prudence would dictate applying to court to approve the communication. The decision in Origin Energy Limited (No.2) [2023] NSWSC 1351 (at [11]) suggests that it is at least highly desirable to seek the court's approval prior to the publication of any supplementary material.
There may be other communications either of a purely administrative nature or communications which encourage creditors to vote on the scheme proposal.
If scheme creditors are being encouraged to vote in favour of the scheme, then:
A failure to follow these guidelines may result in the scheme not being approved on the basis that that failure "undermines the integrity of the voting process or result in [a creditor] being influenced by unfair, unbalanced or misleading information"; A-Cap at [39].
Whilst A-Cap Energy involved a members' scheme of arrangement, the principles from that case will also be generally instructive for creditors' schemes.
Author: Richard Fisher, AM.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.