(Dec 14): Embattled commodity trader Noble Group is on track to complete its mammoth restructuring deal after a Bermuda court approved an officer to carry out the plan, using a local kind of insolvency process.
See: Noble says to take 'alternative' restructuring process without transfer of listing to New Noble
In a brief court hearing on Friday, the judge called the company insolvent and allowed a court-appointed officer to oversee the restructuring.
The green light from the Bermuda court will allow Noble to avoid liquidation after its preferred restructuring plan was scuppered at the last moment by an investigation from Singaporean regulators.
It means that Noble could emerge from restructuring as soon as next week after more than a year of hard-fought negotiations over its US$3.5 billion ($4.8 billion) debt pile.
The Bermuda court process represents a Plan B for Noble and its creditors. They had hoped to avoid a formal insolvency process, which Noble has previously warned could hurt its contractual relations with counterparties.
But Noble’s plan for a consensual debt deal, which involved relisting the company in Singapore, was blocked last week by regulators. Singaporean authorities said the trader wouldn’t be allowed to list as a new entity and announced a probe into its finances.
See: Singapore authorities block New Noble listing
"This is an exceptional case," said Bermuda’s Supreme Court Chief Justice Narinder Hargun. The hearing, which took place in a small courtroom on the island, lasted only 30 minutes and only Noble’s lawyers and the lawyers for its ad-hoc group of creditors made appearances.
The judge asked whether new Noble would ever be listed on any exchange. Christian Luthi, a lawyer for Noble at Conyers Dill & Pearman, said there are no plans to do so.
Still, Friday’s decision represents a light at the end of the tunnel for Noble and its creditors.
The company said on Friday that it anticipated the company’s restructuring would become effective next Wednesday, Dec 19.
The appointment of the officer, technically called a provisional liquidator, will have “no effect” on operations and business will continue as usual, Noble said in a statement. The company stressed that it will have access to trade finance facilities and will continue making payments to customers and suppliers.
There were some "last minute hurdles," said Luthi.
The company was thrown into turmoil late last month after a trio of Singaporean authorities announced a probe for “suspected false and misleading statements.” Noble’s accounting had been in focus since early 2015, when a previously unknown group called Iceberg Research first criticised its practices.
As part of the investigation, the Monetary Authority of Singapore is looking into whether officers of Noble Group and Noble Resources International played a role in any breaches of the law. Authorities also said in late November that they had expanded their investigation to Noble’s longstanding auditor, Ernst & Young LLP.