South Square secures first restructuring plan indemnity costs order against opposing creditor

The Judge made his decision on costs after finding that the opposing creditor had pursued numerous grounds of objection that were “hopeless”, necessitated a great deal of case management and judicial intervention and conducted the litigation in a manner outside of the reasonable norms. As a result, the Court found that despite the need to avoid disincentivising legitimate scrutiny of restructuring plans by opposing creditors, a heavy indemnity costs order was justified.

The decision is significant because it is the first time since Snowden J’s decision in Virgin Active that an opposing creditor has been ordered to bear costs on the indemnity basis, and appears to be one of the first decisions in which the opposing creditor has been ordered to pay costs at all.

The decision will reassure those involved in planning restructurings that despite recent developments, the English courts remain ready to deal robustly with opposing creditors who raise unsustainable objections and whose conduct falls below the reasonable expected norms in litigation.

The judgment can be found here.

Matthew Abraham and Rabin Kok acted for the Plan Company, Madagascar Oil Ltd, at the costs hearing. Mark Phillips KC led them at trial.

The team was instructed throughout by Lee Sennett, Hayley Capani, Lucy Sanderson, Yasmin King, Charles Williams and a broader team from Shoosmiths.