Judgment Hand Down: Madagascar Oil Plan Sanction

On 15 August 2025, Mr Justice Richard Smith delivered judgment sanctioning Madagascar Oil’s restructuring plan, one of the first (and heavily contested) restructuring plans to be sanctioned post-Petrofac.

The Plan Company is incorporated in Mauritius with its sole operating subsidiary in Madagascar. The opposing creditor (Outrider) had unsecured guarantee claims against the Plan Company and its operating subsidiary, while the supporting creditor (BMK) held claims under the same guarantee.

At the sanction hearing, Mr Justice Richard Smith gave detailed consideration to a number of issues, including Outrider’s challenge to the plan on the ground that Outrider would be better off in the relevant alternative and on the ground that the Plan was unfair to it. After hearing oral evidence from the Plan Company’s, BMK’s and Outrider’s principals and considering the relevant authorities including Adler, Thames and Petrofac, he dismissed all of Outrider’s grounds of objection. He found, notably, that “the proper use of the cross-class cram down power is to enable a plan to be sanctioned against the opposition of those unreasonably holding out for a better deal, where there has been a genuine attempt to formulate and negotiate a reasonable compromise between all stakeholders.”

The decision is also notable for its reminder of the need for grounds of opposition to be properly pleaded, and its extensive consideration of international effectiveness issues, on which expert evidence from both Mauritian and Malagasy lawyers was adduced. In particular, the Judge considered in detail the COMI of Mauritian offshore companies (Authorised Companies), the scope of the public policy exception, and whether a UK RP was a ‘foreign proceeding’ and ‘foreign representative’ under the Mauritian enactment of the Model Law (which will be of interest to practitioners in other Model Law jurisdictions, including England).

Featured members: Mark Phillips KC, Matthew Abraham and Rabin Kok (instructed by Shoosmiths) acted for the Plan Company.

Read the full judgment here.