The resumption of a meeting of creditors from August 9, 2021 of the indebted attraction company Mystic Mountain Limited, MML, in an attempt to reach an agreement to pay the secured bondholders and avoid being officially declared bankrupt and / or d t have secured creditors empowered to assert control of asser to realize their investment, was set for Tuesday, February 8th. The repossession was ordered in a January 18 ruling by Supreme Court Justice David Batts following a request for clarification by the trustee appointed by Mr. ML Caydion Campbell, on the recommendation of Insolvency Supervisor and Trustee of the government, retired Supreme Court Justice Ferdinand Smith.
“The court’s decision and clarification of the issues surrounding a meeting of creditors to consider a proposal made only to secured creditors is welcome,” Campbell told the financial gleaner this week, confirming the new meeting.
Campbell also confirmed that an amended proposal must be filed with the Office of the Insolvency Monitor. While noting that the new proposal has not yet been received from MML, the trustee said that the amended proposal was intended to be directed only to secured creditors.
An earlier proposal, filed last July and which was the subject of the August 2021 meeting with JCSD Trustee Services Limited, representatives of sole secured creditor Sky-High Holdings Limited, was rejected. A verbal amendment to that proposal made at the meeting was also rejected by Sky-High, which MML owes some $1.1 billion in bond interest and principal.
The court, by canceling the August meeting because notice had not been given to all proven creditors, as required by insolvency law, paved the way for the filing of an amended proposal at the postponed meeting of February 8.
“The trustee is therefore ordered, pursuant to sections 277 and 280 of the Insolvency Act, to convene a meeting of creditors to consider the proposal and any amendments within 21 days of the date of this judgment. The time limit for which is extended accordingly,” the court ordered.
A financial gleaner The report issued on January 21, while correctly conveying the court’s order for the meeting of all creditors to be called within 21 days of the January 18 judgment, had inadvertently implied that the meeting had taken place in March.
The Office of the Insolvency Monitor has confirmed to the financial gleaner this week that he had received notification of an amended proposal to be tabled before the February 8 meeting, but that he had not yet received the proposal. Assistant Insolvency Supervisor Fayola Evans Roberts noted that the court’s decision allowed for an amended proposal to be presented.
Campbell would not comment on the prospect of the amended proposal being accepted by the bondholder and/or unsecured creditors, who are now entitled not only to attend the meeting of creditors, but also to vote on whether or not to accept. of the proposal.
“I will not speculate on the future prospects of Mystic Mountain Limited or its business prior to the February 8, 2022 meeting and any decisions that may be made there,” Campbell told the financial gleaner in an email response.
“It is further declared that at a proposal review meeting, all proven creditors are entitled to attend in person or by proxy and to vote,” the court ruling said.
The court held that the decision to allow all creditors to vote would not disadvantage any class of creditors. It noted that firstly, the secured creditors can, in the event of rejection of the proposal, proceed to the liquidation of their securities and proceed to the recovery of the sums which are due to them. She also underlined the fact that, in the case of secured creditors, “an approved proposal which relates to their category is only binding if it is accepted by the majority of the secured creditors”.
“It bears repeating also that even a proposal which is accepted will not receive the approval of the court if it is not intended to benefit all the creditors”, according to Article 42(2)(b) of the insolvency law, Batts wrote in the court ruling.
He explained that once a proposal is rejected, the matter is treated as a voluntary assignment in bankruptcy under the Insolvency Act, triggering the appointment of a trustee and the suspension of all proceedings, except those related to secured creditors. In such a case, the case would eventually come back to court for a decision.
The Supreme Court judge agreed with attorneys for the trustee that it would be rare for unsecured creditors to vote against a proposal that would keep the debtor in business.
“This is because often assets, which provide security to secured creditors, are integral to the generation of income that unsecured creditors expect to be satisfied. A rejection forcing them into bankruptcy, all things being equal, could well see them worse off or the same as if the proposal had been accepted,” Batts said in the judgment, pointing out that the statutory recovery regime for companies facing to solvency matters, which seems to be the purpose of insolvency law, is not absurd, but rather achievable and consistent with the reality of industry and commerce.
The judge also accepted Campbell’s attorneys’ suggestion that the purpose of the statutory provision requiring notice of a meeting of creditors to persons to whom a proposal was not made – in this case, unsecured creditors – allows for comment, dialogue and possibly the opportunity for unsecured creditors to persuade secured creditors that there are good reasons to approve the proposal.
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