BETWEEN : ANACONDA NICKEL HOLDINGS PTY LTD (ABN 66 073 521 758)

BETWEEN : MURRIN MURRIN HOLDINGS PTY LTD (ABN 83 073 405 562)

Corporations - Scheme of arrangement application for meetings of creditors - Factors for consideration - Foreign creditors - Contracts governed by foreign law - Ancillary proceedings in the United States - Power to restrain scheme creditors under s 411(16) of C_orporations Act_ - Abridgement of time - Approval of the Schemes

Corporations Act 2001 (Cth), s 411, s 1322(4)(a)

Corporations Regulations 2001 (Cth), reg 5.1.01(1), reg 5.6.14A, reg 5.6.36

Bulong Nickel Pty Ltd [2002] WASC 226

CTC Resources NL v Australian Stock Exchange Ltd [2000] WASCA 19; (2000) 22 WAR 48

Curlex Manufacturing Pty Ltd v Carlingford Australia General Insurance Ltd [1987] 2 Qd R 335

FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69

GE Capital Corporate Finance Group Ltd v Bankers Trust Co [1995] 1 WLR 172

Harman v Secretary of State, Home Department [1983] 1 AC 280

Index Group of Companies Pty Ltd v Nolan [2002] FCA 608

Re Alabama, New Orleans, Texas & Pacific Junction Railway Company [1891] 1 Ch 213

Re Australian Co-operative Foods Ltd [2001] NSWSC 382; (2001) 38 ACSR 71

Re Central Pacific Minerals NL [2002] FCA 239

Re Chevron (Sydney) Ltd [1963] VicRp 39; [1963] VR 249

Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252

Re Hills Motorway Ltd [2002] NSWSC 897; (2002) 43 ACSR 101

Re Mercantile Mutual Insurance (Australia) Ltd [2002] FCA 1278; (2002) 43 ACSR 128

Re NRMA Insurance Ltd [2000] NSWSC 49; (2000) 33 ACSR 523

Re Ranger Minerals Ltd; Ex parte Ranger Minerals Ltd [2002] WASC 207; (2002) 42 ACSR 582

Re Reid Murray Acceptance Ltd [1964] VicRp 12; [1964] VR 82

Re Sonodyne International Ltd (1994) 15 ACSR 494

Re Stockbridge Ltd (1993) 9 ACSR 637

Re Subinto Pty Ltd (1993) 11 ACLC 230

Re Timor Sea Petroleum NL [2000] VSC 337; (2000) 35 ACSR 186

Sovereign Life Assurance Company v Dodd [1892] 2 QB 573

1 Murrin Murrin Holdings Pty Ltd ("MMH") and Anaconda Holdings Pty Ltd ("ANH") applied for orders pursuant to s 411 of the Corporations Act 2001 (Cth) ("the Act") to convene scheme meetings, to approve an explanatory statement to be dispatched to scheme creditors and for directions as to the convening, advertising, holding and conduct of the scheme meetings.

2 These applications came before me on 18 November 2002. They were heard at the same time as applications made by Glencore Nickel Pty Ltd ("Glencore Nickel") and Glenmurrin Pty Ltd ("Glenmurrin") for similar orders. I granted the plaintiffs' applications and those of Glencore Nickel and Glenmurrin.

3 Applications for approval of the Schemes came before me on 15 and 17 January 2003. Approval was granted. These are my reasons for granting the various applications.

4 The explanatory statement for which the plaintiffs in these applications sought approval ("Explanatory Statement") relates to two separate but dependent schemes of arrangement, being the MMH scheme and the ANH scheme (collectively the "Schemes"). The Schemes are governed by the same Explanatory Statement and are identical save for the participation of counterparties to foreign exchange hedging contracts ("FX Contracts") in the MMH Scheme. Further, the Schemes are substantially consistent with those proposed by Glencore Nickel and Glenmurrin.

5 Many of the matters in issue in these applications arose for determination in the Glencore Nickel/Glenmurrin applications. Where the Schemes and issues overlap, I refer the reader to my reasons in Glencore Nickel Pty [2003] WASC 18. I focus in these reasons on the areas of difference between the Schemes and the Glencore Nickel/Glenmurrin Schemes.

6 In broad terms, the Schemes involve the extinguishment of secured debt of each of the plaintiff companies ("Scheme Debt") in return for the affected creditors ("Scheme Creditors") receiving:

(a) a proportionate share of a cash payment in the aggregate of US$114 million which will be funded by a rights issue to be undertaken by Anaconda Nickel Ltd ("ANL") and underwritten by Glencore International AG; and

(b) a proportionate beneficial interest in the proceeds of pending arbitration and litigation proceedings against Fluor Australia Pty Ltd ("the Fluor proceedings") relating to the construction of the Murrin Murrin nickel and cobalt project ("Project").

7 The Project is operated by a joint venture between Glenmurrin (40 per cent) and MMH (60 per cent). Anaconda Operations Pty Ltd ("AO"), a wholly owned subsidiary of MMH, is the manager of the Project. MMH's parent is ANH and ANH's parent is ANL. AO is involved in the Fluor proceedings on behalf of MMH and Glenmurrin.

8 It is a condition precedent to the Schemes and the Glencore Nickel/Glenmurrin Schemes that each of them is approved by the Court and other regulatory bodies.

(a) US$340 million aggregate principal amount of 9 and 3/8 per cent senior secured notes issued by MMH in 1997 and due in 2007, guaranteed by ANH ("Fixed Rate Notes");

(b) US$62 million aggregate principal amount outstanding of floating rate senior secured notes issued by MMH in 1997 and due in 2005, guaranteed by ANH ("Floating Rate Bonds"); and

10 Thus, the Scheme Creditors are the holders of the Fixed Rate Notes and Floating Rate Bonds (together referred to as the "Bonds") and parties to the FX Contracts. The Schemes have two primary objectives being:

(b) distribution to each Scheme Creditor of its rights to its proportionate share of the cash payment and proceeds of the Fluor proceedings ("Entitlement").

11 MMH, as issuer, and ANH, as guarantor, have defaulted under:

(a) an Indenture dated 28 August 1997 between MMH, ANH and J P Morgan Chase Bank ("Bond Trustee") relating to the Fixed Rate Notes ("Indenture");

(b) a Floating Rate Note Purchase Agreement dated 28 August 1997 between MMH, ANH and the initial purchasers relating to the Floating Rate Bonds ("Floating Rate Note Purchase Agreement"); and

(c) various related security documents in favour of the Collateral Trustee in respect of the Fixed Rate Notes and the Floating Rate Bonds.

12 The security documents include fixed and floating charges over the assets and undertakings of MMH and ANL, MMH Mining Mortgages and a Share Mortgage by ANH (the "Security Documents"). The securities are granted to the Collateral Trustee. The Collateral Trustee holds the security granted by MMH, ANH and ANL on trust for the Bondholders and other participating beneficiaries under a Collateral Trust Deed dated 28 August 1997. The Collateral Trustee is currently ANZ Capel Court Ltd ("ANZ Capel Court").

13 At the time of the application there was approximately US$62 million aggregate principal amount of the Floating Rate Bonds and all of the aggregate principal amount of Fixed Rate Notes outstanding. Approximately US$28 million in respect of the FX Contracts was outstanding. MMH is in default under the FX Contracts which have been closed out.

14 The FX counterparties have the benefit of the same security over the assets, rights and property of MMH as the holders of the Fixed Rate Notes and the Floating Rate Bonds on a pari passu basis.

15 The debt obligations of MMH and ANH under the Fixed Rate Notes, the Floating Rate Bonds and the FX Contracts are collectively referred to as the "Anaconda obligations". Holders of the Anaconda obligations representing over 79 per cent of the aggregate principal amount and accrued interest outstanding of the Scheme Debt ("Consenting Anaconda Holders") have agreed not to take any enforcement action before 15 February 2003 (or not later than 28 February 2003) with respect to the defaults pending the Schemes.

16 Under an agreement dated 30 September 2002 between MMH, ANH and the Consenting Anaconda Holders ("Voting Agreement"), the Consenting Anaconda Holders agreed to vote in favour of the financial restructuring of MMH and ANH as described in the Voting Agreement and the Explanatory Statement.

(a) sections 2, 6, 7, 8 and 9 of the Explanatory Statement; and

(b) an Implementation Deed, other than clauses 11 and 12. The Implementation Deed includes the MMH Fluor Trust Documents which comprise the Fluor Proceeds Trust Agreement, the Fluor Litigation Deed, the MMH Fluor Fixed Charge and the MMH Fluor Deed of Priority.

18 The MMH Fluor Trust Documents have the same effect as documents referred to in the Glencore Nickel/Glenmurrin Schemes (see pars 18-19 of Glencore Nickel (supra)).

19 However, the Implementation Deed is different in material respects from the Implementation Deed in the Glencore Nickel/Glenmurrin Schemes. The most significant differences arise because the Collateral Trustee, ANZ Capel Court, has refused to be a party to the Implementation Deed or to agree to release securities held on behalf of the Scheme Creditors under the Collateral Trust Deed in the event of approval of the Schemes by the Scheme Creditors and this Court. The Collateral Trustee is concerned at the risk of a dissatisfied creditor challenging the Collateral Trustee's right to release securities held by it pursuant to the Collateral Trust Deed. ANZ Capel Court was not represented at the hearing although its views were communicated to the Court in two letters from its lawyers adduced in evidence by the plaintiffs.

20 The plaintiffs are incorporated, and have their principal assets, in Western Australia. As with the Glencore Nickel/Glenmurrin Schemes, the Bondholders are resident outside Australia and the Bonds are regulated by documents governed by the law of the State of New York. The Collateral Trustee's concern appears to arise because of the possibility that the Schemes, if approved, may not be binding upon a dissentient or non-participating Bondholder who seeks to enforce rights under the Bonds or the securities in the United States. For that reason, it is a term of the Schemes that, on or before the Effective Date, applications are to be made in the United States under s 304 of the United States Bankruptcy Code ("304 proceedings") to enjoin Scheme Creditors from taking action in the United States in relation to any property or rights dealt with under the Schemes.

21 The plaintiffs' relied on evidence from United States' lawyers describing 304 proceedings as follows:

"Section 304(a) of the Bankruptcy Code provides that a foreign representative may commence in the United States a proceeding that is ancillary to a pending foreign proceeding ...

An ancillary case serves as a jurisdictional aid for a foreign representative to facilitate the administration of a foreign proceeding ... The purpose of section 304 is to provide a statutory mechanism through which United States' courts may defer to and facilitate foreign insolvency proceedings."

22 It is not a condition precedent of the Schemes or a ground for their termination that the plaintiffs be successful in the 304 proceedings.

23 Under cl 9.1 of the Implementation Deed, the Indenture and other financing agreements ("the Financing Documents") and the Bonds are to be cancelled and of no further force and effect on and from the Effective Date. The Effective Date is the date that is two business days after the Notification Date which is the date on which the Scheme Administrator gives notice that all of the conditions precedent to the Schemes have been satisfied and the Anaconda rights issue has been completed.

24 MMH, ANH, the Bond Trustee and all other parties to the Financing Documents are to be released from all liability under them and the Bonds. Clause 9.5 of the Implementation Deed provides that the Scheme Debt is extinguished on and from the Effective Date.

25 However, under cls 9.2 and 9.3 of the Implementation Deed, the cancellation and termination of all the Security Documents (and Intercreditor Agreements) is subject to the Scheme Administrator having been appointed as Replacement Collateral Trustee. The appointment of the Scheme Administrator as Replacement Collateral Trustee is subject to the satisfaction of the Replacement Trustee Conditions. They are:

(a) the obtaining of the leave of the Court under s 411(7) of the Act to the appointment of the Scheme Administrator as Collateral Trustee under the Collateral Trust Deed;

(b) MMH and ANH succeeding in the 304 Proceedings in New York;

(c) the Scheme Administrator obtaining a legal opinion satisfactory to them, acting reasonably, from lawyers qualified to advise on New York law, as to the effect of the 304 proceedings under New York law; and

(d) the expiry of any notice period provided for under the Collateral Trust Deed for the removal of ANZ Capel Court.

26 Once the Replacement Trustee Conditions have been satisfied, the Schemes provide that the requisite majority beneficiaries, as defined in the Collateral Trust Deed, will be deemed to have authorised the removal of ANZ Capel Court from its position as Collateral Trustee under cl 15.1(b) of the Collateral Trust Deed and to have appointed the Scheme Administrator in its place. In their capacity as Replacement Collateral Trustee, the Scheme Administrator will complete, sign and deliver for registration with the relevant authorities the documents required to discharge the Security Documents and Intercreditor Agreements. Thereafter, the Security Documents shall be terminated and cancelled and be of no further force and effect and the property and assets secured by the documents will be released and discharged.

27 If, as the evidence suggests, the Secured Creditors are the persons entitled under the Collateral Trust Deed to authorise the removal of the Collateral Trustee, the deemed authorisation will be valid and effective as the Schemes bind all Scheme Creditors by operation of law. As in the Glencore Nickel/Glenmurrin Schemes, the intention and effect of the Schemes is that they bind the holders, legal and equitable, of the Bonds. For the reasons given at par 53 in Glencore Nickel (supra), the registered holder of the Bonds is a bare trustee or nominee of the Beneficial Owners.

28 It is intended that the Schemes remain valid and binding on the plaintiffs and the Scheme Creditors even if the Scheme Administrator does not replace the current Collateral Trustee and the securities subject to the Collateral Trust Deed are not released and discharged as contemplated by cl 9.7 of the Implementation Deed. The plaintiffs, and I assume the Consenting Anaconda Holders, regard themselves and the Scheme Creditors as being sufficiently protected because the Scheme Debt the subject of the securities would be extinguished by the Schemes and the securities would no longer secure any obligations. The Schemes do not purport to bind the Collateral Trustee and do not impose any obligation on it. Further, the Collateral Trustee did not identify any specific prejudice it would suffer under the Schemes (if approved) or raise any other matter such as to make it unlikely that the Court would ultimately approve the Schemes. There was no evidence or analysis of the nature and extent of the risk, if any, to ANZ Capel Court in a foreign court if the Schemes are approved.

29 For the reasons given in Glencore Nickel (supra) (at pars 44-45) I concluded that the risk of successful action in the United States was not a ground for refusing to convene a meeting of Scheme Creditors. Whether or not approval of the Schemes should be subject to alterations or conditions under s 411(6) is more appropriately considered at the approval hearing.

30 I concluded that it was appropriate for Garry Trevor and Andrew Love of Ferrier Hodgson to act as Scheme Administrator notwithstanding any appointment as successor Collateral Trustee because the proposed appointment was for the limited purpose of effecting a discharge of the Security Documents and the Intercreditor Agreements. Accordingly, I granted leave under s 411(7) of the Act for that to occur.

31 Slightly different issues arose in these applications on the question of whether there should be different classes of creditors. The Bondholders and the FX counterparties hold security under the Collateral Trust Deed. Pursuant to that Deed, each of the Bondholders and FX counterparties rank equally notwithstanding that their interests may arise at different times or in respect of obligations or liabilities in different currencies or otherwise may be subject to different terms and conditions. Further, each Bondholder and FX counterparty is entitled to a pari passu distribution in any realisation of the securities held under the Collateral Trust Deed.

32 However, pursuant to cl 13.3 of the Collateral Trust Deed, money standing to the credit of a fixed rate DSR account are to be held for the benefit of the fixed rate beneficiaries and pursuant to cl 13.4, money standing to the credit of a floating rate DSR account are to be held for the benefit of the floating rate beneficiaries. However, MMH is in default of its obligations and there are no material funds standing to the credit of the DSR accounts. No issue in relation to the marshalling of securities arises.

33 I set out the law relating to classes of creditors in pars 47-48 of my reasons in Glencore Nickel (supra). I do not propose to repeat it here. As the Bondholders and FX counterparties have the same Entitlement under the Schemes, an equal opportunity to participate in the funding of the Fluor proceedings and are entitled to a pari passu distribution in a realisation of any securities under the Collateral Trust Deed, I saw no basis for treating the Scheme Creditors differently.

34 However, Glencore International AG is a FX counterparty. It is the ultimate holding company of Glenmurrin and at the time of the hearing held approximately 34 per cent of the issued shares in ANL (the ultimate holding company of both MMH and ANH). Glencore International AG held approximately 1.3 per cent by value of the Scheme Debt. However, as 79 per cent by value of the Scheme Creditors have contracted to vote in favour of the Schemes, it did not have the capacity to influence the outcome of the vote at the Scheme Meetings.

35 Where all proposed Scheme Creditors have similar legal interests in their capacities as creditors, they properly form part of one class unless some sufficient ground of distinction can be shown or the capacity to consult together with a view to their common interest is lacking: Re Crusader Ltd (1995) 17 ACSR 336 at 344-345; Re Jax Marine Pty Ltd [1967] 1 NSWR 145.

36 In the circumstances of this case I did not regard the fact that Glencore International AG was both a shareholder and a FX counterparty as a sufficient reason to require it to vote as a separate class. In any event, records of voting at the scheme meetings would disclose its impact on the outcome of the Schemes.

37 A schematic representation of the Scheme Creditors and the detail of the voting and election arrangements are contained in Annexure 1 and 2 to these reasons. As with the Bonds in the Glencore Nickel/Glenmurrin Schemes, the Depositary Trust Company ("DTC") is the registered holder of the Fixed Rate Notes. DTC holds the Fixed Rate Notes as a nominee on behalf of Custodians being a broker, bank or other nominee acting as a Custodian for one or more of the Beneficial Owners of the Fixed Rate Notes. The same voting procedure proposed for the Bondholders in the Glencore Nickel/Glenmurrin Schemes is proposed in the Schemes for the Fixed Rate Notes: see pars 28-32 of Glencore Nickel (supra).

38 The plaintiffs sought orders pursuant to s 1322(4)(a) of the Act that their applications under s 411 not be invalidated by the failure to provide in the Explanatory Statement reports as to affairs strictly in compliance with Form 507. In particular, the Form 507s omitted:

(a) in the case of ANH, particulars of and amounts owed to individual "other creditors" is sch H (which creditors are not secured and not subject to the Schemes); and

(i) names of addresses and individual entitlements of employees; and

(ii) particulars of amounts owed to individual "other creditors" in sch H (which creditors are not secured and not subject to the Schemes).

39 Having regard to the evidence, there was nothing in the identity of the creditors or the extent of the individual indebtedness that was likely to be material to the Scheme Creditors. Further, as I noted in Glencore Nickel (supra), the Form 507 is not specifically designed for the provision of information to creditors in the context of the scheme of arrangement. I was satisfied that the omission should not invalidate the applications.

40 In other respects the Schemes parallel the Glencore Nickel/Glenmurrin Schemes. They contain waivers and releases against the plaintiffs and other parties. Further, following amendments to the Explanatory Statement approved on 17 December 2002, the Fluor Funding Election was confined to the same group election described in the other Schemes.

41 There is also evidence in these applications that the plaintiffs will be able to pay their respective debts as and when they fall due after the financial reconstruction effected under the Schemes. Further, if the Schemes do not go ahead the most likely outcome for the plaintiffs is that an administrator will be appointed under the Act in which case it is likely the Collateral Trustee would enforce its security. Finally, on the basis of specified assumptions, the expected dividend available to Scheme Creditors if the plaintiffs were wound up is less than that expected under the Schemes.

42 The plaintiffs also sought the same orders for abridgement of time in relation to reg 5.6.36, dispensation from reg 5.6.14A and a restraint under s 411(16) of the Act. I made those orders for the same reasons as given in Glencore Nickel (supra).

43 As stated at the outset, I granted the plaintiffs' applications to convene a meeting of creditors and to approve the Explanatory Statement. I did so for the same reasons for approving the Glencore Nickel/Glenmurrin Schemes. For convenience I repeat them here.

44 I was satisfied that the Schemes fit within the statutory concept of a compromise. Further, following minor amendments to the Explanatory Statement, I was satisfied that all of the main facts relevant to the exercise of their judgment was available to the Scheme Creditors. Having regard to all relevant considerations, I exercised the discretion to convene the Scheme Meetings. In doing so I had regard to, inter alia, the following additional matters:

(a) a very significant proportion of Scheme Creditors had already voted in favour of the compromise reflected in the Schemes by having executed the Voting Agreements;

(b) ASIC had given consideration to the proposed Schemes and the Explanatory Statement and had identified nothing that caused it to appear and make submissions opposing the convening of the first meeting or the making of the other orders sought by the plaintiffs;

(c) if the Schemes did not take effect, the most likely result would be the appointment of administrators under the Act which in turn would be likely to result in the Collateral Trustee enforcing their security interests. Further, based on the assumptions contained in the Explanatory Statement, it appeared that the Scheme Creditors would be financially better off under the Schemes than if the plaintiffs were to be wound up;

(d) the Schemes did not prejudice the interests of unsecured creditors;

(e) there was no evidence or suggestion of the Schemes being contrary to public policy because of bad faith, improper purpose, oppression or commercial immorality;

(f) there was no apparent reason which had been brought to my attention or which I could foresee why the Schemes would not in due course receive the Court's approval.

45 In accordance with the orders made on 18 November 2002, the applications to approve the Schemes were listed on 15 January 2003. On that date the hearing was adjourned to 17 January 2003. The plaintiffs sought orders that:

(a) pursuant to s 411(4)(b)(6) of the Act, the Schemes of Arrangement between the plaintiffs and the Scheme Creditors be approved;

(b) pursuant to s 411(12) of the Corporations Act, the plaintiffs be exempted from compliance with the requirements of s 411(11) of the Act.

46 In determining the applications for approval, I considered whether:

(a) the applicants had complied with the orders made on 18 November and 2 and 17 December 2002;

(c) there had been compliance with s 411(17) of the Act.

47 Once satisfied that jurisdiction exists, the Court has a discretion as to whether or not to approve the Schemes, although the power is supervisory: Re Amcor Ltd (2000) VSC 157; (2000) 34 ACSR 199 at 208. However, where there is no opposition to the order for approval and there are no public policy grounds for withholding approval, very considerable weight should be given to the commercial judgment of the secured creditors who have voted to approve the Schemes: Re Bond Corporation Holdings Ltd (1991) 5 ACSR 304 at 316; Re Hudson Conway Ltd [2000] VSC 21; (2000) 33 ACSR 657 at 662, 665, and 667.

48 I was satisfied on the evidence that the plaintiffs had, with minor exceptions of such nature as not to invalidate the meetings, complied with the orders made on 18 November and 2 and 17 December 2002 relating to the dispatch of the approved Explanatory Statement and amendments thereto to the Scheme Creditors and the other directions concerning the convening, advertising, holding and conduct of the Scheme Meetings.

49 The MMH Scheme Meeting and the ANH Scheme Meeting were held on 8 January 2003. A quorum of creditors was present at both meetings.

50 No Scheme Creditors were present in person at either meeting. The Scheme Creditors voting by proxy at the MMH Scheme Meeting represented 87.17 per cent of the total value of the MMH Scheme Debt as at the date of the meeting. The Scheme Creditors voting by proxy at the ANH Scheme Meeting represented 76.07 per cent of the total value of the ANH Scheme Debt as at the date of the meeting.

51 The resolution put to the MMH Scheme Meeting was:

"That the Scheme of Arrangement proposed between Murrin Murrin Holdings Pty Limited and the MMH Scheme Creditors, as described in the Explanatory Statement accompanying the notice convening the Meeting is agreed to (with or without modification as approved by the Court)."

52 The resolution put to the ANH Scheme Meeting was:

"That the Scheme of Arrangement proposed between Anaconda Nickel Holdings Pty Ltd and the ANH Scheme Creditors, as described in the Explanatory Statement accompanying the notice convening the Meeting is agreed to (with or without modification as approved by the Court)."

53 The resolutions were passed by the majority required under s 411(4)(a)(i) of the Act. In particular, the results of the vote on the resolution considered at the MMH Scheme Meeting were that:

(a) the number of MMH Scheme Creditors who voted in favour of the resolution was 132 and those against nil, being 100 per cent and nil per cent respectively of the number of MMH Scheme Creditors present and voting in personal or by proxy; and

(b) the amount of debts and claims of the MMH Scheme Creditors present and voting in favour of the resolution in person or by proxy was US$396,256,109.23 and of those against US$ nil, being 100 per cent and nil per cent respectively of the total amount of the debts and claims of the MMH Scheme Creditors present and voting in person or by proxy.

54 The results of the vote on the resolution considered at the ANH Scheme Meeting were that:

(a) the number of ANH Scheme Creditors who voted in favour of the resolution was 120 and those against nil, being 100 per cent and nil per cent respectively of the number of ANH Scheme Creditors present and voting in person or by proxy; and

(b) the amount of debts and claims of the ANH Scheme Creditors present and voting in favour of the resolution in person or by proxy was US$323,833,068.28 and of those against US$ nil being 100 per cent and nil per cent respectively of the total amount of the debts and claims of the ANH Scheme Creditors present and voting in person or by proxy.

55 The participation of Glencore International in its capacity as a counterparty voting on the MMH Scheme did not affect the outcome of the vote. Further, as in the Glencore Nickel/Glenmurrin Schemes, the Voting Agent exercised its discretion to accept as valid voting instruments and master voting instruments submitted after the deadline and permitted Custodians to submit rectified master voting instruments. However, the conduct made no difference to the results.

56 The requisite majority for the approval of the Fluor Funding Election was not obtained. Thus, the Election did not become effective. As a result, AO is not bound to fund the Phase 2 Fluor expenses. However, if it elects to continue funding them, the rights of the Collective Scheme Creditors to the Phase 2 Fluor Claims and their allocation of the Phase 2 Net Recovery is extinguished, except for a limited right of recovery of costs. However, the expected dividend that would be paid to Scheme Creditors if the Schemes were put into effect was calculated on the assumption that there would be no Phase 2 Net Recovery.

57 At the adjourned hearing on 17 January 2003, the Consenting Bondholders applied for relief in relation to the Fluor Funding Election. I rejected the application for the reasons given in Glencore Nickel (supra) (at pars 81-86).

Section 411(17) of the Act

58 Under s 411(17) of the Act, the Court must not approve an arrangement unless it is satisfied that the arrangement has not been proposed for the purpose of enabling any person to avoid the operation of any part of the provisions of Ch 6 or there is produced to the Court a statement in writing by ASIC that it has no objection to the arrangement. Based on the evidence before me at the hearings and having regard to the nature of the Schemes, I was satisfied that the Schemes had not been proposed for the purpose of enabling any person to avoid the operation of any provisions of Ch 6 of the Act. In any event, the plaintiffs produced to the Court a statement in writing by ASIC that it had no objection to the Schemes.

59 I reached the conclusion in ordering the Scheme Meetings that there was no apparent reason which had been brought to my attention or which I could foresee why the Schemes would not in due course receive the Court's approval. As with the Glencore Nickel/Glenmurrin Schemes, there are only two issues on which I propose to comment.

60 The first relates to the adequacy of the notice of the Schemes given to the Fixed Rate Note Holders. As with the Glencore Nickel/Glenmurrin Schemes, the evidence adduced at the approval hearing satisfied me that the relevant documentation the subject of the orders made in November and December 2002 was promptly served on the Beneficial Holders of the Fixed Rate Notes. Further, there is evidence that no Custodian or Beneficial Owner complained of any inability to vote on the Schemes or the Fluor Funding Elections in the time available.

61 The second issue relates to the question whether the Schemes, if approved, would bind dissentient or non-participating Bondholders who seek to enforce their rights under the Bonds or securities in the United States.

62 ANZ Capel Court was not represented at the approval hearing. Its views were again communicated to the Court in two further letters from its lawyers which were adduced in evidence by the plaintiffs. Nothing new was raised in the correspondence. Further, the most recent correspondence contains no statement of opposition to the Schemes and no submission that approval of the Schemes be subject to any proposed alteration or condition.

63 The plaintiffs and the Secured Creditors directly affected by the Schemes have made a judgment as to what is in their best commercial interests. The Collateral Trustee did not identify any specific disadvantage to it if the Schemes were approved. In any event, it is difficult to see why the interests of the Collateral Trustee should, as a matter of policy, dictate a result different from that which would otherwise apply to the beneficiaries on whose behalf it holds the securities, namely the Secured Creditors. I saw no reason why the matters raised on behalf of ANZ Capel Court should affect the outcome of the applications for approval.

64 For the reasons given in Glencore Nickel (supra) (at pars 91-92), I concluded that it was appropriate to approve the Schemes without alteration or condition and so ordered.

65 I also granted an exception from s 411(11) of the Act. As the Court order approving the Schemes effects no alteration to the constitution of the plaintiffs who are unlisted wholly owned subsidiaries, there is no need to have the Court order annexed to the plaintiffs' constitutions: see Re Victorian Grain Services [2000] VSC 334; (2000) 35 ACSR 198; Re Amcor (supra) at 208.