“The NewCo Scheme Creditors will have their present loans and guarantee structures replaced by participation in a new guaranteed syndicated facility. Their respective participation in that facility will be measured by reference to the fair market value of the vessels over which each has security; each takes a “haircut” as to the remainder of the outstanding principal of the present debt. Security over all the vessels is now to be shared and there is a mechanism for assigning priorities and adjusting interest rates. The term of the new debt and the interest rates chargeable are adjusted from the term date of the present indebtedness. As some form of compensation for the deficiency which each NewCo Scheme Creditor will have to bear, each such creditor gets a share in cash within the Group (though at the moment it does not look as though there will be any) and some DRs allocated according to a formula. Thus they gain some participation in the equity of the business going forward.”
“2.1 A private plan (onderhands akkoord), such as this WHOA Plan, is a plan offered in the context of a formal procedure under Part 2 of the Dutch Bankruptcy Act (Faillissementswet), which procedure was introduced as part of the Act on the Confirmation of Private Plans (Wet homologatie onderhands akkoord) (the WHOA). A private plan allows a debtor to propose to its creditors and/or shareholders, or any subset of them, a composition or arrangement with respect to its debts or obligations owed by it to those creditors and/or shareholders. A private plan under the WHOA will become legally binding if, in short, the following requirements are met: (a) the approval of at least one ‘in-the-money' class of creditors by a majority representing at least two thirds (2/3) in value of the relevant creditors in that class who casted a vote; and (b) the sanctioning, upon request, of the private plan by a competent court. 2.2 If a private plan is approved by a relevant creditor class and subsequently sanctioned by the competent court, such private plan will bind all creditors and shareholders subject to it, including those creditors and shareholders who voted against it or abstained from voting, as well as their successors and assignees. A private plan will only be sanctioned by the court, if the court is satisfied that the private plan meets the relevant statutory requirements. 2.3 In accordance with section IV of the European Restructuring Directive Implementation Act (Implementatiewet richtlijn herstructurering en insolventie) this WHOA Plan is governed by the law as it applied before the entry into force of section I of said act.”
“7.7 Under this WHOA Plan, the shares in the Scheme Company will be transferred to the STAK, and thereafter the Group will undergo further restructuring, as further described below. The Creditors and Shareholders of the WHOA Company are entitled to the (reorganisation) value generated by such transfer and subsequent restructuring. The allocation (toebedeling) of that (reorganisation) value will be described in more detail below. 7.8 To effect the Restructuring, the following measures are contemplated by this WHOA Plan: (a) a transfer of the shares in the Scheme Company to the STAK and a transfer, by way of a contribution as share premium (agio), of all claims held by the WHOA Company against Vroon Group Finance B.V. to the Scheme Company (the Transfer); (b) a release and discharge of all rights and claims against the WHOA Company and, insofar related to the FWA Guarantee, each WHOA Group Company; (c) replacement shareholder approval, in accordance with section 370(5) of the Dutch Bankruptcy Act, to the extent necessary to implement the Restructuring, including for the purpose of (i) approving or ratifying the WHOA Company's entry into the Restructuring Support Agreement and the transactions contemplated thereby, including the Transfer and the disposal of the Exiting Vessels (pursuant to the terms of the Restructuring Support Agreement and, following the Restructuring Effective Date, the Override Agreement) (the Exiting Vessels Disposals); and (ii) the liquidation of the WHOA Company, by way of a turbo-liquidation (turbo-liquidatie) in accordance with section 2:19(4) of the Dutch Civil Code.”
“7.11 The Scheme Company has proposed, as set out in the Practice Statement Letter, a scheme of arrangement with the Scheme Creditors pursuant to Part 26 of theUK Companies Act 2006 (the Scheme). A scheme of arrangement is a statutory procedure under English law which allows a company to agree a compromise or arrangement with its creditors (or classes of creditors) and for the terms of the compromise or arrangement to bind any non-consenting or opposing minority creditors, subject to certain conditions being satisfied. 7.12 The Scheme aims to modify and vary certain rights of the Scheme Creditors against the WHOA Company and to confer on the Scheme Company a power of attorney to execute on behalf of each Scheme Creditor any necessary documents to implement certain steps under this Restructuring, including the allocation of the value realised under this WHOA Plan by effecting certain releases in exchange for which the participating parties will acquire certain new rights and/or instruments as described below. The key terms of the Scheme are set out in more detail in the Practice Statement Letter, which is attached to this WHOA Plan as Annex 8 (Practice Statement Letter) and the Witness Statement, which is attached to this WHOA Plan as Annex 9 (Witness Statement).”
“9.3 The above consideration will be allocated (toebedeeld) to the relevant Creditors or Shareholders. This will not take place as part of this WHOA Plan, but under or in connection with the Scheme (including pursuant to the Implementation Agreement) and/or certain ancillary measures (or any other document entered into in connection therewith), as summarised below. The Implementation Agreement, which is attached to this WHOA Plan as Annex 11 (Implementation Agreement) explains in more detail how the above consideration is to be allocated amongst the various Classes. The Implementation Agreement will be executed upon sanctioning of the Scheme by, among others, the Scheme Company for itself and, to the extent that any Scheme Creditor has not already done so, on behalf of the Scheme Creditors who are a party to it (acting as their attorney and agent pursuant to the terms of the Scheme). Creditors and Shareholders should refer to the Implementation Agreement for more details.”
“(a) this Deed; (b) each of the documents substantially in the form set out in Schedule 6 (Key Restructuring Documents); (c) each of the documents listed in Schedule 7 (Security Documents); (d) the FE0055 Side Letter; and (e) any other document that is necessary or desirable to give effect to the Restructuring in accordance with this Deed, the Scheme and the other Restructuring Documents.”
“(a) Subject to the other provisions of this Deed, each DR Party may only be issued with the Depositary Receipts calculated in accordance with the provisions of this Clause 8.4 (Calculation and distribution of Depositary Receipts). (b) Each DR Party (and/or its Nominee, as applicable) shall be issued with a proportion of the Depositary Receipts calculated in accordance with Part 3 (Calculation of Depositary Receipts) of Schedule 4 (Calculations). (c) A DR Party shall only be issued with Depositary Receipts as part of the Restructuring Steps, and may only elect for one or more Nominees to be issued with all or part of its Depositary Receipts as part of the Restructuring Steps, if: (i) it has validly completed and delivered a Lender Claim Form, including for the avoidance of doubt a validly executed and delivered Confirmation Deed, to the Information Agent prior to the Voting Instruction Deadline; (ii) in the case of a Nominee it has validly executed and delivered a Confirmation Deed, to the Information Agent prior to the Voting Instruction Deadline; (iii) it (and/or its Nominee, as applicable) is not a Disqualified Person; (iv) Lamo has received confirmation prior to the KYC Deadline from the STAK that such DR Party (and/or its Nominee, as applicable) has provided the STAK KYC in a form satisfactory to the STAK; and (v) Lamo has received confirmation prior to the KYC Deadline from the NRF Notary that such DR Party (and/or its Nominee, as applicable) has provided a notarial power of attorney substantially in the form set out in schedule 3 (Form of Notarial Power of Attorney) to the Lender Claim Form and any additional documentation in a form satisfactory to the NRF Notary. (d) If a DR Party does not satisfy the requirements of this Clause 8.4 (Calculation and distribution of Depositary Receipts) to be able to be issued with the Depositary Receipts on the Restructuring Effective Date, such DR Party’s Depositary Receipts will, unless such DR Party (and/or its Nominee, as applicable) is a Sanctioned Person or a Russia Connected Person, instead be issued on the Restructuring Effective Date to the Holding Period Trustee, to hold in accordance with Clause 9 (Holding Period Trustee) and the Holding Period Trust Deed.”
“With effect from the Restructuring Effective Time on the Restructuring Effective Date, subject to Clause 2.2 below, each Creditor, each Nominee and each Company Party (on behalf of itself and each of its successors and assigns): (a) irrevocably, unconditionally, fully, finally and absolutely waives and releases and forever discharges, to the fullest extent permitted by law, each and every Claim that it ever had, may have or hereafter can, shall or may have against the Released Parties, in each case, in relation to or arising directly or indirectly out of or in connection with: (i) the preparation, sanction or negotiation of the Restructuring, the Scheme or the Restructuring Documents or the implementation and/or execution of the Restructuring; (ii) the execution of the Restructuring Documents or any other documents required to implement the Restructuring or the taking of any steps or actions necessary or desirable to implement the Restructuring (including, without limitation, the steps set out in the Restructuring Steps Plan); and/or (iii) with respect to any Relevant Director (past or present), any matter arising out of or in connection with any steps, actions or omissions on or prior to the Restructuring Effective Date by or on behalf of such person holding such positions with respect to any Company Party”
“(1) If a majority in number representing 75% in value of the creditors or class of creditors or members or class of members (as the case may be), present and voting either in person or by proxy at the meeting summoned under section 896, agree a compromise or arrangement, the court may, on an application under this section, sanction the compromise or arrangement. (1A) Subsection (1) is subject to section 899A (moratorium debts, etc). (2) An application under this section may be made by– (a) the company, (b) any creditor or member of the company, (c) if the company is being wound up, the liquidator, or (d) if the company is in administration, the administrator. (3) A compromise or arrangement sanctioned by the court is binding on– (a) all creditors or the class of creditors or on the members or class of members (as the case may be), and (b) the company or, in the case of a company in the course of being wound up, the liquidator and contributories of the company. (4) The court's order has no effect until a copy of it has been delivered to the registrar.”
“20. The classic formulation of the principles which guide the court in considering whether to sanction a scheme was set out by Plowman J in Re National Bank Ltd[1966] 1 WLR 819 at 829 by reference to a passage in Buckley on the Companies Acts (13th edn, 1957) p 409, which has been approved and applied by the courts on many subsequent occasions: “In exercising its power of sanction the court will see, first, that the provisions of the statute have been complied with; secondly, that the class was fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent, and thirdly, that the arrangement is such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve. The court does not sit merely to see that the majority are acting bona fide and thereupon to register the decision of the meeting; but at the same time the court will be slow to differ from the meeting, unless either the class has not been properly consulted, or the meeting has not considered the matter with a view to the interests of the class which it is empowered to bind, or some blot is found in the scheme.” 21. This formulation in particular recognises and balances two important factors. First, in deciding to sanction a scheme under s 425, which has the effect of binding members or creditors who have voted against the scheme or abstained as well as those who voted in its favour, the court must be satisfied that it is a fair scheme. It must be a scheme that “an intelligent and honest man, a member of the class concerned and acting in respect of his interest, might reasonably approve”
“(1) In principle, a party not bound by a scheme has standing to appear at the sanction hearing and oppose the sanction of the scheme. There are no statutory restrictions seeking to limit the class of persons who can address the Court, or the considerations which can be taken into account by the Court. However, the Court does not have a roving commission at the suit of any objector who claims any prejudice as a result of a scheme, and the Court’s discretion must be kept within proper bounds. (2) It would be blinkered, narrow and uncommercial for the Court to ignore the fact that the scheme is the first and necessary step of the wider Restructuring, with which it is inextricably intertwined. If a third party is not affected by the scheme itself but by a subsequent step which is dependent on the sanctioning and implementation of the scheme, then the Court is entitled to take that into account. The contrary approach would be unduly artificial. The Court should consider whether there is a close connection between the scheme and the relevant subsequent step, or whether the connection is merely remote and inchoate. (3) The Court cannot ignore objections of a third party on the basis that they are better raised in another forum. The Court must apply its own legal principles to determine whether it is right to sanction the scheme. However, the Court is entitled to consider whether the objecting party will have other opportunities in other legal proceedings to voice its objection, especially where the relevant subsequent steps (which form the basis for the objection) have only a remote and inchoate connection with the scheme. (4) In the specific context of a creditors’ scheme which forms part of a wider restructuring involving a debt-for-equity swap (through a transfer of the group’s assets to a new company owned by the senior creditors): (a) In principle, the company is entitled to propose a scheme with its senior creditors alone. (b) However, if any junior creditors or shareholders can adduce evidence to satisfy the Court that they have a real (as opposed to fanciful) economic interest in the company, then they are entitled to object to the scheme – even if the scheme does not alter their strict legal rights. The Court is exercising a discretion and can properly consider whether the scheme is unfair in that sense. (c) The above propositions are correct (and provide a basis upon which the Court can properly refuse to exercise its discretion to sanction the scheme) even if: (i) the scheme itself does not operate to transfer away the assets of the company (but is merely a condition precedent to such a transfer); and/or (ii) the scheme is solely designed to obtain the consent of a small minority of senior creditors, and the scheme would be unnecessary if all of the senior creditors consented to the restructuring. (d) For the purposes of assessing whether a person has a real economic interest in the company, the Court must ask whether any value would be available for such a person in the comparator to the scheme. (e) If the Court concludes that the company is wrong in its assessment of where the value “breaks” (in other words, if the Court concludes that the scheme and the wider restructuring provide a worse outcome for the objecting parties than they would receive in the comparator), then the Court should not exercise its discretion to sanction the scheme. There would be a blot on such a scheme. Further, sanctioning the scheme would legitimise a transaction which is unfair to the objecting parties.”
“106. The Company accepts that the Court is entitled to hear from the Shareholders. It does not take a strict “standing” point notwithstanding that, if the Company is correct as to what is the comparator to the Scheme, the Shareholders have no real economic interest in the Company absent the Restructuring (of which the Scheme is an integral part). They are entirely out-of-the-money as matters stand. 107. However, issues relating to the intended transfer of the Parent’s shares in the Company to the STAK arise in the proceedings before the Dutch court where the Shareholders challenge the fairness of the WHOA Plan. The Shareholders contend before the Dutch court that the WHOA Plan does not sufficiently value their rights and should not be sanctioned. They advance the argument before the Dutch court that, if the Restructuring fails, there will be a solvent wind-down of the Group and not a collapse. They rely upon the same evidence as they have filed in this Court. These are all matters which the Dutch court will be able to take into account when considering whether or not to sanction the WHOA Plan. 109. The Dutch court has a broad discretion and, in any event, whether or not the transfer of the Parent’s shares in the Company should be permitted without the approval of the Shareholders is entirely a matter of Dutch law on which the English court should not trespass. It is not for the English court to form its own view as to what the test should be for such a permission or to seek to apply that (or any) test. The issue for the English court is whether the Scheme (a domestic matter between the Company and the Scheme Creditors) should be sanctioned in circumstances in which it will bind the Scheme Creditors to the Restructuring. The Scheme will not bind the Shareholders to the Restructuring. Their interests are a matter for the Dutch court and are being protected through the arguments raised by them through their Dutch counsel.”
“3.31 In view of the extent of the interests involved, it would be unacceptable for an agreement with such serious shortcomings to be approved. Further research into the various aspects mentioned above is necessary, if necessary by an expert to be appointed by your Court. 3.32 Vroon and the MoCom will tell you, just as during the Hearing, that it is really one to twelve and that any further delay would lead directly to the bankruptcy of Vroon. 3.33 However, there is still time to organise a careful restructuring process. Although a restructuring or at least a refinancing is necessary because the financial indebtedness of Vroon Group has become due and payable in its entirety, the Vroon Group has proven to be operationally successful in recent years. Between 2018 and 2022, the Vroon Group structurally achieved a positive operating result (EBITDA) of an average of USD 77 million (the A&M Valuation Report, Production 6, p. 20). The Vroon Group now has approximately USD 100 million in cash in its bank account and has been able to meet all its ongoing operating costs. 3.34 Vroon Group is therefore not in need of liquidity and there is no need for additional working capital. The need for restructuring is therefore solely motivated by the fact that the long-term loans of Vroon Groep become due and payable. Normally, these loans are refinanced and not, at least not in full, repaid. It [sic] The problem at Vroon Groep is that the loans are spread over approximately 15 different banks and it is therefore very difficult to refinance all debts. In addition, a substantial part of the Banks has now been taken out by an external investment fund or an investment bank. This has led to this WHOA process. 3.35 However, in view of the positive results of the Vroon Group, this process is not under great time pressure, at least not because bankruptcy is imminent due to liquidity shortages. Only the Banks can possibly file for bankruptcy. At the same time, however, they are pre-eminently the ones who have an interest in a structured process and for whom bankruptcy would be very harmful. This means that there would have been time, with the help of the restructuring expert, to draw up a more careful and balanced plan than what is now before you.” “3.48 The 'threat of bankruptcy' that Vroon and MoCom have been using for several years to exclude the Shareholder from the discussion is therefore exaggerated to a certain extent. The Banks have already seen a substantial part of their claims repaid to date and are aware that they are also very likely to be repaid the remainder of their claims if they reach a joint solution. 3.49 According to EY, the alternative scenario presented to your Court, namely that Vroon would be declared bankrupt and the Banks proceed to a fire sale of their collateral, would result in the Banks being left with a residual claim of approximately 50 to 30 percent of their claims. 3.50 In the context of the English Scheme of Arrangements that Lamo has started in the context of the present restructuring, the shareholder's lawyers sent a letter to the lawyers of the Vroon Group on5 May 2023 explaining that such a chaotic, piece meal bankruptcy liquidation is not a realistic alternative at all in the event that the restructuring as contained in the RSA will not take place (Jones letter Day [sic] to Allen & Overy on UK Scheme of5 May 2023 , Production 39). 3.51 It is much more likely that, in such a scenario, the Banks will attempt to liquidate the Vroon Group company on a solvent basis. Vroon has the necessary cash to finance such a process and the proceeds would be sufficient to repay the Banks in full. There would then be a surplus of USD 100 to 200 million, as the CEO explained in his email to the CFO of19 January 2023 (see the Letter of Objection, production 8d Vroon, par. 2.4). The Banks, the Vroon Group and the Shareholder therefore all have an interest in a joint solution.”
“122. I do not find persuasive the Company's argument based on an analogy with the forum non conveniens cases – that is to say, the argument that Conservatorium should be denied standing in this jurisdiction because it will have the opportunity of making its case in either South Africa or the Netherlands. 123. I do not find the forum non conveniens analogy an apt one. Where a case is stayed on forum non conveniens grounds, the Court declines jurisdiction and the entire matter is referred on to another Court for determination. But there is no question of declining jurisdiction here. For one thing, I was not asked to by the Company: it positively wishes its application for sanction to proceed. For another, as David Richards J pointed out in Re T & N[2005] 2 BCLC 488 at [122], the jurisdiction under the statute is not one which the Court has power to decline: "The English Courts…remain bound by statute to give their own consideration to the fairness of the CVAs or schemes of arrangement, and notwithstanding the strong cross-border element and the desirability of concerted action, have no right or power to cede or qualify that jurisdiction." 124. It seems to me that if the Court forms the view, as I have, that the objector has raised issues which arguably have a bearing on the question of the fairness of the scheme before it, the Court should consider those issues in determining whether to sanction the scheme or not. It cannot decline to take them into account on the basis that they are better raised elsewhere. If arguably relevant to the fairness analysis, then they should at least be evaluated. The Court cannot decline to deal with one part of the overall inquiry it is bound to undertake.”
“48. What is now ordinarily adopted as the starting point is to identify the appropriate comparator: that is, what would be the alternative if the scheme does not proceed. In Re British Aviation Insurance Co Ltd[2006] 1 BCLC 665 ;[2005] EWHC 1621 (Ch) ("the BAIC case"), Lewison J (as he then was) considered this to be "critical to deciding whether all the policyholders form a single class"; and in Re Apcoa Parking (UK) Ltd[2014] EWHC 997 (Ch) I agreed that "that will necessarily inform, and in many if not most cases be the most important factor in, the discussions". 49. The reason is two-fold. First, a fair comparison between a policyholder's rights if there is no scheme and its rights under the proposed scheme depends on ascertaining the nature and quality of the right in the 'non-scheme world', and the latter depends on the appropriate comparator. Secondly, only by identifying the comparator can the likely practical effect of what is proposed be assessed and the likelihood of sensible discussion between the holders of rights so affected and between them and others with different rights be weighed fairly. 50. Thus, for example, the likelihood of imminent liquidation may accentuate or diminish the importance of lender priority according to the effect of liquidation on the rights in question, and on whether the assets of the company on liquidation would be sufficient to cover all or only some debts according to their different positions in the debt waterfall.”
“51. Does the exercise nevertheless demonstrate that there is a realistic chance that the value of the group is in excess of the value of the Senior Debt, which is one of the ways in which Mr Chivers puts it? For these purposes, again I do not think that it does. It is too technical an approach to engender much confidence. I do not consider that I can conclude that, on a valuation basis, the Mezzanine Lenders are getting a raw deal because there is a good or even reasonable case for saying that they are being deprived of value. The evidence is not that strong. 52. I have considered this conclusion particularly carefully in the light of the manner in which the evidence has been presented. There was no cross-examination on the valuation evidence, so I must approach a rejection of the evidence with particular care. The absence of cross-examination has meant that my understanding (particularly of the Monte Carlo technique and the limits of its appropriateness) is more limited than it would have been with the benefit of the sort of testing that comes from cross-examination. However, I have to consider the evidence as it is presented to me. The scheme companies have produced expert evidence which is comprehensible and relates to a real point – how much would a purchaser pay for the group now? The MCC has chosen to counter it with a different type of evidence, which does not address that evidence but which seems to carry out a much more theoretical exercise. I do not consider that it is successful in displacing the companies' evidence (and indeed in some respects it does not seek to do so – it seeks to do something different), or in raising a sufficient possibility of there being some unrealisable value in the group of which the Senior Lenders will be the unfair beneficiaries if the restructuring goes ahead. This also applies to the two confirmatory exercises carried out by LEK (identified above) which featured very little in the MCC's case.”
“A bankruptcy would be virtually inevitable if the WHOA court rejected the Plan.”
“120. As I have described above, the Scheme Company has faced financial difficulties since 2016, which were compounded by the unprecedented challenges resulting from the Covid-19 pandemic. The overall restructuring of the Group has been heavily negotiated with its different stakeholders since 2020. The Group has entered into a number of Support Agreements with key stakeholders under which the Scheme Company has agreed to propose the Scheme as a key part of the implementation of the Restructuring. If the Scheme is not approved, these Support Agreements will terminate (which will also automatically terminate the Court-Ordered Stay) and the Board considers it unlikely that the terms of a different restructuring will be agreed with all creditors. 121. Should the Restructuring fail, and given the outstanding payment defaults on the Group’s obligations to the lenders, enforcement against the Group’s primary assets is a realistic prospect that would be detrimental to the interest of the Group and its creditors as a whole. Absent the implementation of the Restructuring, the Scheme Company considers that there is unlikely to be sufficient time to seek, and significant uncertainty on the possibility of obtaining, the requisite levels of stakeholder consent to implement any alternative transaction. 122. If the Restructuring is not successfully implemented and no alternative transaction can be agreed within a short period, it is expected that lenders would seek to enforce their security against the Group, which would precipitate the Scheme Company (and, by virtue of the existing complex and interdependent intra-group cross-security and guarantee structure (and the resultant “domino effect” in the event of the Scheme Company filing for bankruptcy), each other member of the Group) filing for bankruptcy in the Netherlands (or the analogous process in any relevant jurisdiction) (the Relevant Alternative).”
“I would have to pay what is relevant to the mortgage we set.”
“Q. Yes. I find it quite interesting that enforcement action is so rare in the shipping world. It is very common for banks to appoint receivers, for example, over land. That happens all the time. One of the world's leading shipping banks, your bank, has not done this at all, in 12 years. It is because ships are quite a difficult form of security to take straightforward enforcement action over, is it not? A. No, just the opposite. It is probably much easier than many other assets. The problem with ships is that they will be in different jurisdictions all over the world, so it is about finding them but you have to collect(?) you have specialised companies tracing vessels, you have specialised companies to take possession of the vessels. What has happened in our situation is that we always manage to get the owner to co-operate, because the alternative (indistinct) for the owner, recovery for the owner are better in a private sale than in an enforcement sale. Often it is because we were alone and that we did not have other sort of insights into what he otherwise were doing. So every case are separately. It is also about what type of assets we are looking into and what time of the cycle we are. In some cycles we are active, some cycles we are reluctant. We have other tools, and vessel arrest, we usually have share pledges, we have taken quite a few vessels and put them in warehouse (indistinct), which you do not see in this structure, because it is not an enforcement on the vessel. It is enforcement on the assets. Q. Yes, absolutely and asset ---- MR. JUSTICE LEECH: Just for the transcript, you said you had some cycles were active, we had other tools, can you just describe the other tools to me again? A. What I am saying is if you are in a high market with a lot of liquidity as we had offshore, you are more inclined to take action than if you are at the bottom of the market. Q. The other tools? A. That is the enforcement. You know, for instance, in the UK, you can do it without involving the court. In Holland you need to involve the court. In Denmark and Singapore, you can do it without the court, so they are different depending on which jurisdiction ---- Q. You can enforce against the shares, the corporate structure? A. Yes. Q. That is not shown in the figures that we are looking at? A. Yes. Because what we do is we use that to transfer the vessel to a third party. MR. PERKINS: Your evidence is that you would not do a share pledge enforcement in this case, is it not? A. I am not saying anything of the kind. We are talking about share pledge on the Group level which is the, sort of the framework share pledge. Q. There is no share pledge over an SPV shipping company? A. There is a share pledge on all of them, as a first to the lender and as a second to the Class(?) All shipowning companies have share pledges on two levels, on the borrowing side for the direct lender and last as a security agent. So we could take every single shipowning company and depending on which jurisdiction we will follow the local jurisdiction. For instance, if you want to take Singapore vessels, we just write them a letter. In Holland, we have to go to court. The whole purpose of a share pledge from lender is a sort of power of attorney to transact. That means you can sell the vessel without involving the court in any sale. Of course you have to follow the normal rules about the proper value or whatever, but have you a means to do it. It is a safe(?) power.”
“Definitely not surprised.”
“Q. Can I just show you a paragraph from Mr. Schuijt's evidence and ask you a bit about that. It is volume 1 of the convening bundle, tab 4, and it is page 38, paragraph 49. Do you see there that Mr. Schuijt, in the second sentence, says that, "Further, during the course of negotiations in 2022, it became clear that DNB, which is a Lender under the Existing DNB Facilities ... was not willing to consent to the proposed Restructuring on the same terms as the majority of the Group’s other Lenders." Do you see one of the steps that it took on 3rd August was a "... notice that it had [in fact] arrested a vessel ...in Israel." Do you see that? A. Yes. Q. It would be fair to assume, would it not, that DNB did not regard direct enforcement as a particular challenge, did it? A. Yes. Q. Can I just check, were you agreeing with my question there? A. I agree that they took that action, yes, to create. Q. And that suggests that Lenders will, if required, take enforcement action over vessels, does it not? A. Yes. Q. Again, at paragraph 51, we touched on this earlier, at page 39, this is where I think you said you did not know about this, in November 2022, NIBC Bank resigned from MoCom. A. Yes. Q. And said it was not supportive of the restructuring. Are you also aware that it made threats of enforcement over the vessel secured in its favour? A. Yes. Q. It was threatening to take direct enforcement action over the vessel? A. Yes. Q. Those steps by DNB and NIBC were taken against the backdrop of the attempts by Lenders to agree a consensual restructuring, were they not? A. To get out, yes. Q. At the time, Lenders as a group were trying to put together a consensual restructuring, were they not? A. Yes, a model, yes. Q. Even though MoCom was trying to put together a consensual restructuring, two Lenders still tried to take enforcement action? A. Yes. Q. Are you seriously suggesting to the court that it is your view that it is more likely than not that no enforcement will be taken if the restructuring falls away and there is no deal? A. If there is no, if the restructuring falls away, then there is new negotiations. How hard will it be and how difficult it will be, before the majority of the individual Lenders take action. Q. So your whole thesis depends on Lenders being prepared for yet another round of negotiations? A. Yes. Q. Are you aware that Mr. Stahl has given clear evidence that a number of Lenders have already taken preparatory steps so they are ready to enforce if the Scheme fails? A. Yes. Q. You are aware of his evidence that they are ready to move quickly and arrest vessels if the Scheme fails? A. Yes. That is the Plan C, yes. Q. Have you taken that into account in your evidence? A. I think you always have to have, as an individual lender, your own plan.”
“Q. It is [not] realistic to think that the Lenders would want to terminate the continuing sales process of the Exiting Vessels. That is very, very unlikely, is it not? A. Yes, but if you are sitting like one of the banks, I would not mention names, which already has been in the market, and processing a sale and had a buyer lined up, which also is on initial priority list, they would not wait for this, they would sell the vessels. They have a buyer. Q. Where in your evidence do you explain there are buyers waiting to purchase these vessels? A. I am telling you about enforcement and they will do enforcement because they have prepared themselves. I put that clearly in my statement. Q. Just so I can understand, is your evidence that there are banks, it is not your bank, is it, it is someone else? A. No. Q. You say they would prefer not to proceed with the orderly sales process of the Exiting Vessels and instead to take immediate enforcement action by way of arrest and judicial action? A. That is what they have been saying to the Company as well. Q. That is extremely implausible, is it not? A. You know, I trust them on this one. Q. What I struggle with is this, work with me on this. Suppose it is right that 40% of the vessels would just continue to be sold through an orderly sales process because there is no reason why they would not be. Why would you not just use the same protocol, the 60%? That is obviously what you should do, is it not? A. You know, when we did this process, we also put in (inaudible due to coughing) account because we did not expect that we could sell our vessels (indistinct) so we reserved$30 million for close-down cost. Of course, if we can find an orderly way together with a restructure whereby we can avoid cost it would be feasible but it will require that all exiting Lenders accept it so if some Lenders does not want to sell under this scheme, maybe such a bid cannot be concluded. Some of the bids are assuming they get all vessels, but we already know that the vessel on the initial priority list, which is eight vessels, will not be going in that direction.”
“Q. Do you see that he concludes: "... in all the restructuring situations I have been involved in over the years, none has been as difficult or as time consuming as this one." You have no reason to doubt that evidence, have you? A. That is his statement; yes. Q. You have no reason to doubt it? A. To his opinion? Q. Yes. You have no reason to doubt that? Let me clarify, you are not suggesting he does not hold that view when he gives that evidence, are you? A. That is his view. MR. ALLISON: Yes. MR. JUSTICE LEECH: Do you share that view or not? A. I have been in many -- I do not know. Q. No, do you share that view -- he says his experience: "...none has been as difficult or as time consuming as this one." In your experience, is it the same or not? A. I think a seven-year period is extremely long, yes, and then I think with all the bilateral facilities and the stakeholders, it is extremely difficult in combination with the corona and the volatile market.”
“Q. What is more, when the first arrest occurred in August 2022, you and your fellow directors did not take any steps to file for bankruptcy proceedings, did you? A. No, we did not, but we seriously considered it. Q. That is because there is no duty under Dutch law to file for bankruptcy proceedings merely because a default has occurred or because a creditor has taken enforcement action, is there? A. Under Dutch law, there is no legal obligation to do so, that is correct, but there is a director's responsibility to assess that risk; yes.” “Q. You would prefer a value destructive process with a$500 million insolvency (indistinct) and$100 million of expenses? A. Under Dutch law, as a director, I have to ensure the health going concern status of the business and to engage on a wind-down which has significant operational financial risk. This process would not be without risk and cost. I am talking about staff retention, about customers, about suppliers. If we would engage on basically saying, as directors, we liquidate the business only because there might be a chance that the Shareholder could potentially generate a higher return, I think that would be not a wise decision for the Board to take.” “Q. That is why I asked you at the beginning, for the purposes of answering this question, I do not want you to consider what the Lenders say or not. I want to imagine a world where the Lenders are on board with the process. It is obvious that the Board with prefer on orderly wind-down in that scenario. It would preserve the Fair Market Value of the fleet? A. Quite frankly, we have not developed that plan, so for me to state that that would be a viable alternative, I think is very premature. It is very hard for me to say that. But, clearly, you are making an assumption that the Lenders would support it. That is an assumption you have to make. I think we have, based on also the discussions we have had internally, had discussions on this particular matter, with the MoCom and other Lender representatives. The answer was very clear, that the Lenders do not support such orderly wind-down and are not willing to finance it. Q. I just want to make sure I have an answer to my question. Suppose the Lenders support an orderly wind-down. Are you saying that there would none the less be doubt as to whether the Board would proceed with it? A. I cannot make that statement, because we as management had not developed a plan where I, as a CFO, can say, "Everyone, all the stakeholders, we can execute this. We think we can take the risk and can do this". I cannot state that, because that plan does not exist. Q. I want to suggest that that last answer is untrue and that if the Lenders support an orderly wind-down, there is absolutely no chance the Board would place the Group into liquidation. A. Is that a question? Q. I would like to hear your reaction to it. A. Could you restate that please? Q. There is no chance that the board would put the Group into liquidation if the Lenders supported an 18-month wind-down, is there? A. I think we would seriously consider it, yes. We have to consider alternative scenarios all the time. Also, if this process, as you suggested, would fail, we would need to re-assess as directors what our responsibility is, but for me to speculate on that now, I do not think it will help the process, quite frankly.”
“Q. However, would you accept that a domino effect is not what actually happened when the two arrests took place last year? A. Yes, for good reason. Q. Yes. For example, the first arrest took place in August 2022, did it not? A. The reason the Lenders did not react was we were negotiating the full-scale restructuring. We started 12th July. There was a proposal for the Company. It was replaced by a revised proposal end of July. We were in the middle of negotiating this restructuring. So the more common the other Lenders had a preference to conclude this restructuring in a consensual way, so we accepted that the Company use cash pledged in favour of all Lenders to buy out DNB on this one. Actually, the reason was that the Company has told us they had a buyer for the vessel which was in excess of what they paid to DNB but that buyer failed to honour their obligation. So when this was done, it was actually on the perception that the vessel was sold straight after to a third party, which the Company failed to honour. Q. The reason, of course, behind all of this is the banks and the people who work at the banks, such as you, are commercial people and ultimately you would prefer a deal to ---A. We were in the middle of negotiating a deal. That is the whole point. We were sitting and doing the first part of this, the (indistinct) agreement. We were in the middle of coming to an agreement to save the NewCo part of it which was going to continue as an operating business, which was the whole purpose of the also the (indistinct) is to preserve and protect this company so that it can be a going concern afterwards. It is not about, you know, close down; it is about restructuring.”