RE: I will try again7 Jul 2021 22:12
The contrived, faux threat of insolvency dreamt up by the grubs that once ran Hurricane was exposed by Justice Zacaroli - the Judge's arguments are there in black and white and totally refute the lies pumped out by the previous board . Indeed it can be argued the previous board have been hoisted by their own petard ie their arguments in court ironically exposed the weakness of their case
HTTP://m.lw.com/thoughtLeadership/high-court-declines-to-cram-down-shareholders-in-proposed-part26a-restructuring
The judge concluded that by reference to the three steps, the threshold for satisfaction of Condition A had not been met for the following reasons:
- The “relevant alternative” in Hurricane’s case, in contrast to that in Virgin Active, was not immediate insolvency. Instead, the most likely occurrence if the plan did not succeed was, even on Hurricane’s own submissions, the continuance of the business for at least a further year (to May 2022) before the bonds became due for payment. Whilst current projections showed that by May 2022 there would be a shortfall in Hurricane’s resources to repay the bonds, there was no question of an immediate liquidation. Further, various possibilities suggested that Hurricane could continue beyond May 2022, providing “a realistic prospect that it will retain an income producing asset of at least some value to its shareholders”.
- Having regard to the “inherent uncertainty” involved in the second step, the judge decided that he did not need to conclude that the most likely outcome from the relevant alternative was that there must be a return to shareholders at some point in the future. The fact that there was a realistic prospect that Hurricane would be able to discharge its obligations to the bondholders (based on a range of possibilities, including through refinancing any shortfall owing to the bonds), leaving assets with at least some potential for economic exploitation for shareholders, was enough to refute the idea that shareholders would be no better off under the relevant alternative than under the plan. Said Mr Justice Zacaroli:
“In other words, to retain 100% of the equity in Company that is continuing to trade, with a realistic prospect of being able to repay the Bonds in due course, is to my mind a better position than immediately giving up 95% of the equity with a prospect of a less than meaningful return as to the remaining 5%”.
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