After completion of submissions on the fourth day of the second court hearing, on 14 July 2017, the Australian Supreme Court New South Wales (In the matter of Boart Longyear Limited (No 2) [2017] NSWSC 1105) adjourned the hearing for 14 days to allow the opportunity for satisfaction of an important condition precedent relating to a party involved, which was at that time not satisfied.
The Judge is open about its procedural strategy: ‘I also then took the somewhat unusual step, at least in a scheme hearing, of ordering a mediation between the parties, in the unusual circumstances that the parties to the Secured Creditor Scheme and the Unsecured Creditor Scheme were highly sophisticated entities and had largely either been represented at the hearing or had advised the parties and the Court of their attitude to the schemes.’
Why did the court do so? It discloses its intentions: ‘I took that course because, as I noted in my ex tempore judgment as to that matter delivered on 14 July 2017, interests other than those of the entities before the Court, including employees of the Plaintiffs and the communities in which they operated, both in Australia and internationally, could be adversely affected if the schemes were ultimately not approved and the Plaintiffs were placed in external insolvency administration.’ Third party interests therefore include also the community, even where they are located abroad!
The court continues: ‘I also noted that, if the parties were able to reach agreement as to a potential variation of the schemes, it may be open to the Court to amend the schemes by order made after the creditors’ meetings.’ Given the fact that the court had power to approve the proposed alterations to the schemes in the particular circumstances and given the creditor support for them, the court appoved the schemes.
For those who are sceptical about mediation in corporate restructuring matters the judgment serves as a sign that – under the conditions mentioned – it can work (I know, Australia is far away and one swallow doesn’t make summer).
See: In the matter of Boart Longyear Limited (No 2) [2017] NSWSC 1105, at www.caselaw.nsw.gov.au.