The end of the “little or no weight” approach?

At paragraph 118 of his judgment, Mr Justice Hildyard set out what he considered to be the correct approach to considering objections made by creditors that are “out of the money” in the relevant alternative:

“The resolution of this conundrum appears to me to be that, although what I have described as the “personal” objections of a dissenting creditor which is out of the money are to be given little weight, the general requirement to consider whether there has been a fair distribution of the restructuring surplus is to be treated as overriding and will necessarily take into account, albeit in overall terms, the treatment of the dissenting class.”

Whereas previous judgments have suggested that out of the money creditors’ views on the distribution of the benefits of the restructuring should carry little or no weight, this passage suggests there is a distinction between: (i) “personal” objections; and (ii) objections based on the central, overriding issue of whether the distribution is fair. It is only the former, not the latter, where little or no weight should be placed on the out of the money creditors’ dissenting votes.

Daniel Bayfield KC and Jon Colclough, instructed by Sullivan & Cromwell LLP, acted for the plan companies.

Henry Phillips, instructed by Milbank LLP, acted for a supporting group of creditors.

Read the full judgment here.