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Legal analysis by Harneys lawyers

The Bermuda restructuring JPL: super flexible and key to monitor company-driven restructurings

Publication Date:
30 September 2016

In the recent Bermuda case of Up Energy Development Group Limited, the debtor Company sought to resist a creditor request to appoint Joint Provisional Liquidators (JPLs) to monitor the Company’s proposed restructuring.
Up Energy Development Group Limited is incorporated in Bermuda and listed on the Hong Kong Stock Exchange. Earlier in 2016, the company announced it had defaulted and was negotiating robustly with creditors, underwriters and financiers to explore different options to restructure the company by the end of March. By 29 March 2016, a creditor’s petition was presented against the company on the grounds of non-payment of debt. The Petitioner sought to appoint JPLs to monitor the continuation of the business and determine the feasibility of the restructuring proposal if successfully implemented. Up Energy opposed the appointment of JPLs as it had retained independent restructuring advisors RSM Corporate Advisory and hoped to avoid the stigma of provisional liquidation, especially considering there was no evidence of misconduct of the management to result in insolvency.
Kawaley CJ held that the crucial use of JPLs to facilitate restructuring not only alleviates the Court of the load endured by the US bankruptcy Court, but also gives confidence to both the Court and to creditors that the restructuring process will be credible.
For these reasons, the Supreme Court of Bermuda ruled that the Petitioner’s application to appoint JPLs be granted on a ‘light touch’ basis to assist with the restructuring of the Company and preserve value in the business.

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