Claims of two equal creditors given different treatment under a restructuring plan under Part 26A Companies Act 2006 after court approved cramming down of one creditor’s debt.
Madagascar Oil Limited (MOL), a Mauritian holding company, faced imminent insolvency. A restructuring plan was proposed under Part 26A Companies Act 2006 to restructure MOL’s debt so that its operating subsidiary, Madagascar Oil S.A. (MOSA), could restart oil production.
The restructuring plan was proposed by BMK Resources Limited (BMK), the ultimate parent of the group. It involved releasing MOL and MOSA from guarantee obligations, retaining a $600 million intercompany loan in favour of BMK, and BMK injecting US$7.5 million in new funding to restart oil production. Outrider Master Fund LP (Outrider), another creditor whose claims ranked equally, was to have its debt of circa $71million against each of MOL and MOSA released in favour of an option to be selected by Outrider (which would lead to considerably less realisation).
Outrider challenged the plan’s fairness on multiple grounds and asserted that the plan was unfair, left it “worse off” and was a means to avoid the group’s liability to Outrider. The court dismissed these objections. It found Outrider was not worse off under the plan and that the restructuring achieved a fair allocation of the benefits of the restructuring, despite treating BMK and Outrider, whose claims ranked equally, differently.
The court therefore exercised its discretion to sanction the plan.
Madagascar Oil Limited [2025] EWHC 2129 (Ch)
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