Australian Securities Commission v Marlborough Gold Mines Ltd

Background to the schemes

1. By way of background, the Plaintiffs sell drilling products and provide drilling services and equipment for mining and drilling companies globally, operate in more than 20 countries in respect of drilling services and 40 countries in respect of drilling products, and have more than 4,000 employees globally.
2. On 2 April 2017, BLY and the Second Plaintiff, Boart Longyear Management Pty Ltd ("BLM") entered into a Restructuring Support Agreement ("RSA") with some, but not all, of their major creditors, namely Ares, Ascribe and two Dutch entities which are affiliates of Centerbridge. On 3 April 2017, BLY made an announcement to Australian Securities Exchange Limited ("ASX") in respect of the restructuring and the proposed schemes, which referred to their objectives, the matters considered by BLY's independent directors in developing them and the need to reduce the Plaintiffs' debt and interest costs and improve their liquidity, extend the maturity of their debt and adjust interest arrangements on the debt. That announcement also referred to additional financing facilities provided to BLY by Centerbridge, Ares and Ascribe outside the schemes and to other steps involved in the restructuring, also outside the schemes, including the issue of shares to entities associated with Centerbridge that are the TLA and TLB holders under the Subscription Agreement in exchange for a reduction of the interest rate under those facilities and the entry into director appointment agreements in favour of Centerbridge, Ares and Ascribe. First Pacific was not party to those additional arrangements and it and other holders of the SSNs (other than Centerbridge, Ares and Ascribe) do not obtain any benefits under them, other than any wider benefit from avoiding the Plaintiffs' insolvency by a successful restructuring.
3. Associated arrangements to the schemes provide for Centerbridge, Ares and Ascribe to provide a new revolving asset-based lending facility in the amount of US$75 million, less any amount raised pursuant to a share purchase plan, which will be used to replace three existing facilities, and execution of that new finance facility is a condition precedent to the schemes. A separate Subscription Agreement between BLY and Centerbridge entities, execution of which is also a condition precedent to the schemes, provides for BLY to issue shares to Centerbridge or its nominees, as holders of the TLA and TLB debt, so that they will hold 56% of shares in BLY following implementation of the schemes subject to any dilution under the warrants, in exchange for a reduction of the interest rate payable under the TLA and TLB debts. Other associated arrangements, including the director nomination provisions to which I referred above, are also conditions precedent to the schemes.
4. Mr Jackman, who appears with Mr Izzo for the Plaintiffs, points out that the creditors who have signed the RSA and support the schemes hold approximately 77.9% of the debt held by creditors who are entitled to vote at the meetings of creditors to agree to the Secured Creditors Scheme, at least if those creditors are treated as a single class rather than holders of the SSN debt being treated as a separate class, and 88.5% of the debt held by holder of the 7% unsecured notes who are entitled to vote at the meeting of creditors to agree to the Unsecured Creditors Scheme (Rasetti 21.4.17 [16]).

Affidavit evidence

1. The Plaintiffs rely on the first affidavit of Mr Fabrizio Rasetti dated 21 April 2017. Mr Rasetti is the company secretary of BLY, a director and company secretary of BLM and other entities within the Boart Longyear Group ("BLY Group"), and is also Senior Vice President and General Counsel of BLY. That affidavit was also read in support of the earlier application under s 411(16) of the Corporations Act and refers to the structure of the proposed schemes of arrangement, the background to the schemes and correspondence between the legal representatives of First Pacific and BLY in respect of the schemes.
2. The Plaintiffs also rely on a second affidavit of Mr Rasetti dated 4 May 2017, which provides further information as to the directors and officers of the scheme companies and shares on issue by BLY and refers to the steps which have been taken to verify the explanatory statements for the Unsecured Creditors Scheme and the Secured Creditors Scheme. That affidavit also elaborates on the background to the schemes, the terms of the RSA, the Plaintiffs' financial position and the views reached by KordaMentha in their independent expert's report included in the explanatory statements for the schemes. That affidavit also refers to the implementation steps which would be required for the Unsecured Creditors Scheme and the Secured Creditors Scheme and to a proposed timetable for meetings. It is likely that some amendment to that timetable will be required, both by reason of the fact that it has been necessary to reserve judgment in this matter, and to accommodate the possibility that a second hearing in respect of a scheme may be contested and sufficient hearing time will need to be allowed in case that occurs.
3. By an affidavit dated 2 May 2017, Mr Paul Denaro, who is an experienced United States legal practitioner, sets out the structure for the issue of the 10% secured notes, the 7% unsecured notes and the manner in which they are held by a nominee for the clearing system, the Depository Trust Company (US) but beneficial owners of the notes are treated as persons entitled to vote in respect of a reorganisation plan under the United States Bankruptcy Code. I reach the same result under Australian law for the reasons noted below.
4. By affidavit dated 2 May 2017, Mr James Daloia, who is director of solicitation and disbursements at Prime Clerk LLC, a United States information agent, sets out the way in which scheme creditors hold the relevant debt, the manner in which records are maintained by the Depository Trust Company and registered participants under United States practice, and the process which would be adopted for distribution of documents and information to scheme creditors under United States practice, so that the ultimate beneficial owners of the secured and unsecured notes would receive the documents relating to the schemes and would be afforded the opportunity to vote at scheme meetings. Mr Daloia also sets out the role which would be played by Prime Clerk in tabulating votes submitted in respect of the scheme meetings.

The applicable legal principles

1. Mr Jackman points to well-established principles as to the circumstances in which the Court will order the convening of a scheme meeting and approve a draft explanatory statement, to which I will refer below: Re Amcom Telecommunications Ltd [2015] FCA 341 at [12]; Re Atlas Iron Ltd [2016] FCA 366; (2016) 112 ACSR 554 at [30]; Re DUET Finance Ltd [2017] NSWSC 415 at [15]. Mr Jackman rightly submits that "the court will not ordinarily summon a meeting unless the scheme is of such a nature and cast in such terms that, if it receives the statutory majority at the … meeting the court would be likely to approve it on the hearing of a petition which is unopposed": F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72, approved in Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 504. Mr Jackman also refers to the observation of French J in Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252 at [36] and [44], cited with apparent approval by the Full Federal Court in Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 at [58] that: "It is however important to bear in mind that, by granting leave to convene the meeting, the court does not give its imprimatur to the proposed scheme. If the arrangement is one that seems fit for consideration by the meeting of members or creditors and is a commercial proposition likely to gain the court's approval if passed by the necessary majorities, then leave should be given: Re ACM Gold Ltd (1992) 34 FCR 530 ; 107 ALR 359 ; 7 ACSR 231 ; 10 ACLC 573 (O'Loughlin J). The court is not required to give close consideration to the effects of the scheme upon individual members of the classes of members or creditors affected. So to do would be to "introduce burdensome and to a large extent ineffectual consideration at this interlocutory stage": Re Jax Marine Pty Ltd [1967] 1 NSWR 145 at 148 (Street J). … The court at the stage of ordering a meeting to approve a scheme does not ordinarily go very far into the question of whether the arrangement is one which warrants the approval of the court … That question is to be answered when the scheme returns to the court for final approval. That is not to exclude the possibility that a scheme may appear on its face so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further."

Identification of creditors

1. Mr Jackman also draws attention to an issue concerning the identification of creditors for the purposes of the schemes, where the notes issued under the Secured Notes Indenture and the Unsecured Notes Indenture are issued in a "global" form that is characteristic of United States debt market issues (Denaro [9], [12]). I am satisfied, for the reasons put by Mr Jackman in submissions, which I need not repeat, that the ultimate beneficial owners of the notes are properly treated as the scheme creditors for the purposes of the scheme. That is consistent with the approach adopted in the United Kingdom in Re Castle Holdco 4 Ltd [2009] EWHC 3919 (Ch) and in Re Gallery Capital SA (EWHC, unreported, 21 April 2010), which treated the ultimate beneficial holders as contingent creditors so far as they had the right (as creditors here also have) to be issued with definitive or certificated securities in the case of an event of default, and is also consistent with the approach adopted, by somewhat different reasoning, by McLure J in Re Glencore Nickel Pty Ltd [2003] WASC 18; (2003) 44 ACSR 210.

The test for whether separate class meetings should be ordered

1. The most controversial issue in this application was the constitution of the relevant class or classes in respect of the Secured Creditors Scheme. The practical significance of that issue was self-evident. If SSN holders are treated as a separate class from TLA and TLB holders, then First Pacific has a sufficient percentage interest in the SSN debt to block the scheme at that separate scheme meeting. Equally, if the SSN holders and TLA and TLB holders are treated as a single class, then Centerbridge, Ares and Ascribe, which have committed to supporting to the scheme under the RSA, appear to have a sufficient interest in the SSN debt and TLA and TLB debt at least to satisfy the value test at a scheme meeting. The constitution of classes in the Secured Creditors Scheme would therefore have a potentially significant impact on the prospects of the scheme, subject to the important issue (which would likely only arise if a single scheme meeting is ordered and First Pacific does not have a blocking stake) of the Court's discretion whether to approve a scheme at a second court hearing, to which I will refer below.
2. The question of the constitution of classes needs to be approached in the context of the statutory framework for schemes of arrangement under s 411 of the Corporations Act. Section 411(4)(a)(i) of the Corporations Act has the effect that a compromise or arrangement cannot become binding on a class of a company's creditors unless it has been agreed to by the requisite majority of creditors included in that class present and voting, either in person or by proxy. In Sovereign Life Assurance Co v Dodd [1892] 2 QB 573, Lord Esher MR observed (at 579-580) that: "The Act says that the persons to be summoned to the meeting (all of whom, be it said in passing, are creditors) are persons who can be divided into different classes - classes which the Act of Parliament recognises, though it does not define them. This, therefore, must be done: they must be divided into different classes. What is the reason for such a course? It is because the creditors composing the different classes have different interests; and, therefore, if we find a different state of facts existing among different creditors which may differently affect their minds and their judgment, they must be divided into different classes."
3. Bowen LJ in turn observed (at 582-583), in a passage on which Mr Hutley relied, that the statute: "… makes the majority of the creditors or of a class of creditors bind the minority; it exercises a most formidable compulsion upon dissentient, or would-be dissentient, creditors; and it therefore requires to be construed with care, so as not to place in the hands of some of the creditors the means and opportunity of forcing dissentients to do that which it is unreasonable to require them to do, or of making a mere jest of the interests of the minority." His Lordship also observed, in the often-cited test on which all parties relied, that: "It seems plain that we must give such a meaning to the term "class" as will prevent the section being so worked as to result in confiscation and injustice, and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest."

Areas of commonality and difference as to the treatment of the SSN debt and the TLA and TLB debt

1. First Pacific submits that SSN holders should not be in the same class as TLA and TLB creditors because, first, there are significant differences in the rights attributable to the SSN Indenture and the TLA and the TLB facilities in respect of priority, types of interest and maturity dates, prior to and following the entry into the Secured Creditors Scheme; and, second, Centerbridge as the holder of the TLA and TLB debt is to be issued a majority shareholding in BLY and to receive other benefits, conditional upon the scheme proceeding, that are not available to SSN holders. First Pacific submits that, having regard to these dissimilarities in rights, there is no prospect that the SSN holders and Centerbridge as the TLA and TLB holder can consult together with a view to their common interests. In oral submissions, Mr Hutley emphasised the fact that commonality of interest must be determined by reference to commercial reality (T51). He also fairly recognised that mere contrariety of interest did not necessarily prevent the possibility of consultation, but suggested that the test was rather whether there was "commercial impossibility because of conflict, disparity of rights and disparity of treatment of rights" (T53).
2. On the other hand, Mr Jackman submitted that, although there are some differences in the rights of the SSN holders and Centerbridge as the TLA and TLB holder, those differences were not such as to make it impossible for the secured scheme creditors to consult together with a view to their common interests. Mr Wood, who appears for Ares and Ascribe, similarly emphasised that the issue for the Court, in determining relevant classes, is not merely the existence of any differentiation between the legal rights of scheme participants, but whether that difference would prevent consultation between those parties as to their common interests and that, so far as present rights are concerned, that must have regard to the pending insolvency of the BLY Group (T49).
3. Mr Jackman also submitted that the question whether separate classes were required should depend upon whether all members of the class would be better off if the scheme proceeds, in the sense that the companies would avoid a winding up. Mr Hutley responds, and I accept, that the determination whether separate classes are required at least potentially requires a closer analysis of the differences in rights of creditors inter se, and that separate classes could, in principle, be required, notwithstanding that all creditors were better off by reason of a scheme, where one group of creditors suffered a significant diminution in its legal rights and others did not. I will address below whether the position in this case is such as to require separate classes on that basis.

Additional equity and director nomination rights

1. Arrangements between the BLY Group and the Centerbridge entities that are partly outside the schemes, but conditions precedent to it, confer additional rights on Centerbridge, Ares and Aspire. These matters could potentially raise a question whether Centerbridge, Ares and Aspire should be separated into a separate class of SSN holders from First Pacific and other SSN holders, in addition to the question whether SSN holders on the one hand and Centerbridge as the TLA and TLB holder should meet as separate classes to which the parties directed their attention.
2. Under the Subscription Agreement, Centerbridge obtains a right to additional equity in consideration of a reduction of interest payable under the TLA and TLB facilities. Under the Unsecured Creditors Scheme, Ares and Ascribe also receive additional equity in exchange for debt. Under the Director Nomination Agreement, Centerbridge obtains a once only right to nominate an additional director for election to the board of BLY, in addition to the four directors as to which it already has such a nomination right, and Ares and Aspire also each obtain a once only right to nominate a director to BLY's board. Mr Jackman points out that these arrangements are disclosed in the explanatory statement for the Secured Creditors Scheme, and that disclosure is reinforced by a table which will now be included in that explanatory statement addressing, inter alia, these matters and by an additional paragraph included in the "no" case in the explanatory statements, to which I will refer below. The existence of such disclosure will be relevant to the consideration of this issue at the second Court hearing.
3. Mr Jackman submits that these rights are not class creating because they are not created by the schemes. That submission obviously cannot extend to the shares to be issued to Ares and Aspire under the Unsecured Creditors Scheme. I do not accept that submission in respect of the Subscription Agreement and the Director Nomination Agreement, where those arrangements are conditions precedent to the schemes and they are plainly closely connected with Centerbridge's participation in the schemes. That position is reinforced by, although it does not depend upon, the fact that these rights were initially treated as components of the schemes when the schemes were announced to ASX. I also do not accept the submission made by Mr Jackman that this matter is less significant because further steps, outside the schemes, must occur for additional equity to be issued to the Centerbridge affiliates, including a decision by the directors of BLY to issue the shares and shareholder approval of the issue, where the issue of the securities is a condition precedent to the schemes which will not proceed unless it occurs.

Wider matters relevant to whether a separate class meeting should be ordered

1. I now turn to several wider matters relevant to whether the differences to which I have referred above, whether of legal rights or commercial interests, would make it impossible for SSN holders and Centerbridge as TLA and TLB holder to consult as to their common interests. First Pacific submits that the structure of the classes proposed by the Plaintiffs gives no option to SSN holders to determine whether they wish to continue their loans to the Plaintiffs for the next four years, where there has already been a default under the SSN Indenture, or to receive the liquidation value of their notes. It does not seem to me that a submission at this level of generality assists in determining the matter, and this submission in any event somewhat oversimplifies the position. As I have noted above, if First Pacific obtains the separate class for which it contends, then it has the capacity to veto the scheme, and it appears to propose to do so. If the separate class is not ordered, then Centerbridge, Ares and Ascribe will have the majority of value at a meeting of the secured scheme creditors; may or may not have a majority in numbers, depending upon the number of other creditors who attend; and the Court will have a discretion at the second hearing to determine whether to approve the scheme, any exercise of which may well give significant weight to the views expressed by SSN holders not aligned with First Pacific on the one hand or Centerbridge, Ares and Ascribe on the other.
2. I recognise that, as matters stand, there may be little likelihood that any consultation between at least First Pacific as one SSN holder and Centerbridge, Ares and Ascribe as other SSN holders and Centerbridge as the TLA and TLB holder will result in agreement, where First Pacific has made clear, in its affidavit evidence, that it will not support the Secured Creditors Scheme, apparently without regard to such consultation; and Centerbridge, Ascribe and Ares have committed themselves by the RSA to supporting the schemes, also apparently without regard to such consultation. However, it seems to me that any lack of efficacy of consultation between those parties will result, not from any difference in their legal rights that would prevent such consultation, but from the fact that their commercial interests, as reflected in First Pacific's stated position and Centerbridge's, Ares' and Ascribe's commitments made in the RSA, are opposed.

Collateral benefits

1. Mr Jackman rightly recognises that the fact that affiliates of Centerbridge will obtain a controlling shareholding in BLY, under the arrangements associated with the schemes, and that the Centerbridge entities, Ares and Ascribe will obtain a right to nominate directors to BLY's board, raises questions as to whether those entities are receiving a collateral benefit as a result of the overall recapitalisation of the BLY Group, and that that matter would be taken into account at a second court hearing: Re Aston Resources Ltd above at [35]; Re David Jones Ltd (No 2) [2014] FCA 720; (2014) 101 ACSR 381 at [33]. Mr Wood similarly submitted that so far as benefits obtained by the other parties were outside the scheme, and were properly characterised as matters affecting their interests in respect of the scheme, rather than their rights, then they were properly to be addressed at the second hearing as a matter of fairness, relying on Re Aston Resources Ltd above.
2. First Pacific submits that collateral benefits conferred on a creditor, including in this case the issue of equity to Centerbridge and the conferral of director nomination rights on Centerbridge (and also Ares and Ascribe) may require those creditors to be treated as a separate class for voting purposes from those who receive no such benefit. The authorities on which First Pacific relies for that proposition do not seem to me to support it. In the first of those cases, Re Macquarie Private Capital A Ltd [2008] NSWSC 323; (2008) 26 ACLC 366 at [16], Barrett J held that no separate class was required because there was no indication that the relevant party would be receiving any special benefit, and did not have to address the extent to which any such "special benefit" might constitute a difference in legal rights, as distinct from a commercial interest, so as to require the creation of a separate class. The decision in Re Sylvastate Ltd [2011] FCA 211 at [22] involved a finding that there was no material difference in the interests of a shareholder from that of other shareholders, not a finding that any such difference required a separate class to be convened. The decision in Re iSOFT Group Ltd [2011] FCA 680 at [19] noted a proposal by the scheme proponent that a separate class meeting be held, to address an issue of a collateral benefit, rather than requiring such a meeting. That decision is not authority as to whether such a meeting is required in that situation, as Jacobson J noted in Re Aston Resources Ltd above at [30]. In my view, these cases do not support any requirement for a separate scheme meeting in respect of a collateral benefit that is of commercial character, and that matter should be left for consideration by the Court at the second hearing, in exercising its discretion whether to approve a scheme.

Other matters relevant to the approval of the schemes

1. The Court must be satisfied, at a first court hearing in respect of a scheme, that the Plaintiffs are Part 5.1 bodies, which is uncontroversial in this case. The Court must also be satisfied that the proposed schemes are an arrangement within the meaning of s 411 of the Corporations Act and that the schemes are bona fide and properly proposed. It is uncontroversial in this application that the relevant schemes are "arrangements" within s 411 of the Corporations Act. First Pacific submits that the structure and form of the Secured Creditor Scheme are unfair and oppressive to SSN holders. I have addressed the structure and form of that scheme above and I do not consider that the matters raised by First Pacific are such that the Court could not approve the proposed scheme at a second hearing. In those circumstances, it is preferable that those matters be deferred to a second hearing.

Adequacy of disclosure in the explanatory statements

1. The Court must also be satisfied, at the first court hearing, that the scheme booklets will provide proper disclosure to creditors. Mr Jackman recognises that ss 411 and 412 of the Corporations Act require disclosure of information concerning the effect of the schemes and information that is material to a creditor's decision whether or not to agree to it. I am satisfied that the explanatory statements generally contain the necessary information, subject to the matters noted below, although it must be recognised that they are very complex documents, by reason of the complexity of the proposed arrangements.
2. First Pacific originally submitted, with substantial force, that the initial draft explanatory statement for the Secured Creditors Scheme did not provide any, or any readily comprehensible, analysis of the differences in outcomes for secured creditors which would receive equity under the scheme, principally Centerbridge, Ares and Ascribe, and those SSN holders which would not receive such equity. First Pacific also submitted, with substantial force, that the sections of the draft explanatory statement dealing with reasons that secured creditors may consider voting for and against the scheme did not adequately disclose the fact that the benefits provided to Centerbridge may provide a reason for SSN holders not to support the scheme. In the course of the hearing, and by supplementary submissions by leave, the Plaintiffs proposed an amendment to the explanatory statement for the Secured Creditors Scheme to include a table (to be inserted as paragraph 3.10 of the explanatory statement for the Secured Creditors Scheme) comparing key terms of the SSN, TLA and TLB debts before and after the recapitalisation transactions; identifying alterations to the maturity date of the SSN, TLA and TLB debts, the variation of the change of control trigger, the call schedule, the treatment and priority of security, the interest rate and manner of payment, interest payments date, and the provision of a guarantee; and also drawing attention to the issue of shares to Centerbridge and the director nomination agreements. It seems to me that that disclosure of those matters in a summary form is appropriate to allow secured creditors to identify the changes effected by very complex documents. The Plaintiffs fairly accepted that a corresponding summary of matters relating to the Unsecured Creditors Scheme should be included in the explanatory statement for that scheme.

Whether ASIC had a reasonable opportunity to examine the terms of the schemes and compliance with Corporations Rules

1. The Court must be satisfied that ASIC has had a reasonable opportunity to examine the terms of the schemes and the scheme booklet and make submissions and has had 14 days' notice of the proposed hearing date. By letter dated 3 May 2017, ASIC confirmed that it had had 14 days of notice of the hearing of the application in accordance with s 411(2)(a) of the Corporations Act and had a reasonable opportunity to examine the terms of the proposed schemes in accordance with s 411(2)(b) of the Act and that it did not propose to appear to make submissions, or intervene to oppose the schemes, at the first court hearing. ASIC reserved its position as to whether it would provide a statement under s 411(17)(b) of the Corporations Act to the second court hearing, in accordance with its usual practice. I am therefore satisfied of this matter.
2. The Court must be satisfied, at the first court hearing, that the procedural requirements of the Supreme Court (Corporations) Rules have been met and that there is no apparent reason why the scheme should not, in due course, receive the Court's approval if the necessary majority of votes is achieved. I am satisfied that the operation of rule 2.15 of the Supreme Court (Corporations) Rules is properly excluded or varied, as the orders contemplate, where the scheme meetings will take place in accordance with orders of the Court and the result of the meeting will not take effect without a further order of the Court approving the schemes. The requirements of rule 3.2 of the Supreme Court (Corporations Rules) in respect of consents to act as chairman and alternative chairman and as to the appointment of Mr Kershaw and Ms Nettleton of KordaMentha as scheme administrators are satisfied. There is evidence of verification of factual information contained in the explanatory statements for the schemes (Rasetti 4.5.17 [24]-[45]) and that matter was not controversial in this application.

Treatment of subordinate creditors in the Unsecured Creditors Scheme and other matters

1. The Unsecured Creditors Scheme releases the claims of subordinate claimants within the meaning of s 563A(2) of the Corporations Act, except to the extent of the net proceeds of any policy of insurance that would respond to such a claim. Mr Jackman points out that, by s 411(5A) of the Corporations Act, those claimants are bound by the scheme, although they have not voted on it at a meeting convened under s 411(1) of the Corporations Act. As Mr Jackman points out, the purpose of that section was considered by Gleeson J in Re Atlas Iron Ltd above at [41]-[46] and, although this matter is addressed in detail in Mr Jackman's submissions, it does not require detailed consideration in this judgment. It appears the Plaintiffs have not identified any particular subordinate claim holder or any circumstances which might be expected to give rise to such a claim. I am satisfied that, to the extent that such claims may exist, such an order may properly be made in this case, to avoid the result that subordinated shareholder claims which would not be recoverable on the insolvency of companies within the BLY Group would continue beyond implementation of the scheme and potentially rank ahead of equity issued to higher ranking creditors in exchange for their claims.
2. Mr Jackman also points out that the RSA contains "no shop" and "no talk" obligations, notification and matching rights and a modest break fee of A$1 million payable in circumstances including a failure by creditors to approve the proposed schemes. The circumstances in which the break fee was agreed is addressed in Mr Rasetti's second affidavit, and that fee is relatively small, having regard to the total debt owing under the facilities and would not operate as any real disincentive to voting down the schemes, if creditors are otherwise inclined to do so. These matters are familiar in schemes and are addressed in some detail in Mr Jackman's submissions. I do not see those matters as any reason not to convene the scheme meetings.
3. Mr Jackman also refers to deeds poll which it is proposed will be executed, by the time of the second court hearing, to bind several third parties, including the trustee under the Secured Notes Indenture and the agent under the TLA and TLB facilities to the steps required to execute the schemes. Those matters seem to me to be sufficient to allow the Court to be satisfied as to the Plaintiffs' ability to implement the schemes, if they are approved by creditors and approved by the Court at the second court hearing. It also does not seem to me that the proposed appointment of Mr Kershaw and Ms Nettleton as scheme administrators compromises the independence which is required for their independent expert's report, for the reasons noted by Gleeson J in Re Atlas Iron Ltd at [61].

Orders

1. I make orders in accordance with the short minutes of order initialled by me and placed in the file, substantially in the form submitted to my Associate on 9 May 2017.

---

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 10 May 2017