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Pacific Andes Group: Secret restructuring evidence?

In a recent winding up order made by Justice Davis-White QC of the BVI Court viz. Pacific Andes Enterprises (BVI) Limited, Parkmond Group Limited, and Pard Trade Limited (the Companies) of the Pacific Andes Group, the Court ruled on the issue of the use of "confidential" evidence in proceedings.

The Companies sought to adduce evidence to the Judge, which they were not prepared for other parties to see, save for the BVI advocates, and on the terms of confidentiality such that the advocates would not be permitted to share the information or take instructions on it from their clients. The Companies’ reasoning was that the evidence contained a confidential summary of an outline of a plan of reorganisation, and premature disclosure of this information would impede negotiations and affect the global restructuring plans of the Pacific Andes Group. The Court rejected this argument, and held that the Companies had failed to justify the confidentiality proposed, and further rejected that there could be factors for such a course that might need to be weighed by the Court.

In addition, the Court was mindful that the Companies did not entertain the other parties’ counter proposals to limit the scope of this confidentiality (i.e. information to be shown to certain employees or officers of the creditors). Unsurprisingly, the Court was not even prepared to consider this information on a confidential basis, without this information being made available to all parties. Furthermore, it took the view that the significance of this confidential information was limited, as it only showed efforts to prepare a restructuring plan rather than containing an actual restructuring plan that would be put to creditors or that there were reasonable prospects that the restructuring plan set out would succeed or have a beneficial result for creditors. The winding up of the Companies was ultimately decided on the basis of insolvency, but the discussion on confidential information provides useful insight to a party wishing to rely on confidential evidence not available to the other side. Don't do it. 

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