Noble Group Ltd

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr Justice Snowden
Judgment Date14 Nov 2018
Neutral Citation[2018] EWHC 3092 (Ch)
Docket NumberCase No: CR-2018-008453

[2018] EWHC 3092 (Ch)




Royal Courts of Justice

7 Rolls Building

Fetter Lane, London EC4A 1NL


Mr Justice Snowden

Case No: CR-2018-008453

In the Matter of Noble Group Limited
And in the Matter of the Companies Act 2006

William Trower QC, Henry Phillips and Lottie Pyper (instructed by Kirkland & Ellis International LLP) for the Company

David Allison QC and Stephen Robins (instructed by Akin Gump LLP) for the members of the “Ad Hoc Group” of Scheme Creditors

Hearing date: 12 November 2018

Judgment Approved

Mr Justice Snowden

This is an application by Noble Group Limited (the “Company”) for an order sanctioning a scheme of arrangement (the “Scheme”) between the Company and its Scheme Creditors (as defined in the Scheme) pursuant to Part 26 of the Companies Act 2006 (the “CA 2006”).



The background to the Scheme is set out in a judgment which I gave on 2 November 2018: [2018] EWHC 2911 (Ch) (the “Convening Judgment”). I shall not repeat it at any length here. In the Convening Judgment I gave my reasons for convening one class meeting of Deutsche Bank (“DB”) alone, and a second class meeting of the remainder of the Scheme Creditors. I shall use the same terminology in this judgment as in the Convening Judgment.


Very briefly, the Company is the ultimate holding company of the Noble Group (the “Group”), a major global commodities trader. It is incorporated and has its registered office in Bermuda and is listed in Singapore. The Company has been in financial difficulties for some time, and during the extended period of over a year during which a restructuring has been under negotiation, it has continued to sustain vast losses. The Company now estimates that the Group had a net deficiency of some US$1.1 billion at the end of the third quarter of this year.


The Scheme is part of a broader restructuring of the Group (the “Restructuring”), pursuant to which, in return for the release of the Scheme Creditors' claims, substantially all of the Company's assets will be transferred to newly incorporated subsidiaries of a newly incorporated holding company, Noble Group Holdings Limited (“New Noble” and together the “New Noble Group”), and new debt instruments will be issued to Scheme Creditors by companies in the New Noble Group. New Noble itself will be listed in Singapore in place of the Company, and in addition to receiving debt instruments in the New Noble Group, Scheme Creditors will also receive 70% of the equity in New Noble via an SPV. The existing shareholders of the Company will be issued with 20% of the equity in New Noble, and the existing management will acquire the remaining 10%.


As well as the release of Scheme Claims, a fundamental purpose of the Scheme is to provide the New Noble Group with access to substantial new hedging and trade finance facilities. These facilities will be provided by DB and indirectly provided by those Scheme Creditors who elect to “risk participate” (and thereby become “Participating Creditors”). In exchange for such risk participation in the New Money Debt, Participating Creditors will be issued the structurally senior Priority Debt by the New Noble Group.


It is the contention of the Board that if the Scheme is approved, the New Noble Group will be in a position to compete in annual bids for major commodities contracts in December, that it will be in a position to meet its new liabilities on an ongoing basis, and that value in the existing Group will have been maximised for stakeholders in the Company. Specifically, the Board believes that a successful implementation of the Scheme is likely to generate a better range of outcomes for all Scheme Creditors than the alternative of an insolvent liquidation of the Company, which it is said would only result in a dividend to unsecured creditors of between about 19 and 30 cents in the US dollar.


The Scheme Creditors comprise substantially all of the Company's creditors, save for,

i) ING Bank N.V (“ING”) which will enter into bilateral agreements with the Company;

ii) the holders of the Company's Perpetual Capital Securities which are subordinated and which the evidence indicates would not receive a return in a liquidation. These creditors are to be offered the opportunity under the broader Restructuring to exchange their existing Perpetual Capital Securities for a total of $25 million of a new subordinated debt instrument to be issued by New Noble; and

iii) the holders of certain other “Excluded Claims” which are defined in the Scheme and which include the claims of DB and various professionals and administrative service providers.


Under the Scheme, the Scheme Creditors' claims against the Company will be released, in return for which, provided they have submitted valid claims before a Bar Date two months after the Scheme becomes effective and their claims have been admitted or adjudicated to be valid, Scheme Creditors will be issued with the Scheme consideration. The claims determination and adjudication procedure culminates in the independent adjudication of disputed claims by a retired Court of Appeal judge or a nominated QC, and has been developed so as to be analogous to the proof of debt process in an insolvent liquidation in the UK.


The amount of Scheme Consideration with which individual Scheme Creditors will be issued will vary depending on the total amount of Accepted Scheme Claims and whether or not that Scheme Creditor elects to risk participate and thereby to become a Participating Creditor (which is an option open to all).


The Explanatory Statement contained a section setting out high, medium and low case scenarios to assist Scheme Creditors in deciding (i) whether or not to support the Scheme and (ii) whether or not to elect to become a Participating Creditor. In summary, if the Scheme is implemented:

i) the returns to Participating Creditors are expected to be between 58.4 and 47.4 cents on the dollar, in return for which they would be required to risk participate the equivalent of between 18.2 and 14.7 cents on the dollar (as a proportion of their Scheme Claim); and

ii) the returns to Non-Participating Creditors are expected to be between 24.7 and 33.8 cents on the dollar.

Stakeholder approval for the Restructuring and the Scheme


The transfer of substantially all of the Company's assets to subsidiaries of New Noble was authorised by an overwhelming majority of shareholders at a special general meeting on 27 August 2018 (the “Shareholder Resolution”). In waiving the requirement that the Senior Creditor SPV should make a mandatory bid for the other shares in New Noble, the Securities Industry Council that regulates takeovers in Singapore imposed a condition that the Restructuring is completed within three months from the date of the Shareholder Resolution.


The Scheme Meetings of Scheme Creditors were held on 8 November 2018. The Scheme was approved by DB at its meeting, and by 199 out of the 202 Scheme Creditors who voted at the second meeting. The total turnout at the second meeting was high — equal to approximately 89.48% by number of those entitled to vote. Together, the Scheme Creditors in favour represented approximately 98.51% in number and 99.98% in value of those voting at the second meeting.

International matters


In order to facilitate the international effectiveness of the compromises brought about as part of the Restructuring, the Company is also promulgating an inter-conditional scheme of arrangement in Bermuda, where it is incorporated and where it has its registered office. The sanction hearing for the Bermudan scheme is fixed for 14 November 2018.


The Company has, however, never had a substantial presence in Bermuda. Until earlier this year its centre of main interests (“COMI”) was in Hong Kong. At the time it announced that it had reached a Restructuring Support Agreement with the members of the Ad Hoc Group of its main creditors on 14 March 2018, the Company announced that it intended to move its COMI from Hong Kong to England. It claims to have completed that COMI shift in April 2018 and relies upon that change of COMI and a number of other factors, including the governing law of some of the debt instruments to be released, to justify this Court exercising its scheme jurisdiction over the Company.


On the basis that its COMI is now in England, the Company also intends to seek recognition of the Scheme in the US pursuant to principles of comity and/or Chapter 15 of the US Bankruptcy Code. A hearing of the petition is listed before the US Bankruptcy Court for the Southern District of New York on 15 November 2018.

The Approach to Sanction


In Re Telewest Communications (No. 2) Ltd [2005] 1 BCLC 772 (“ Telewest”) at [20]–[22], David Richards J explained the relevant principles which guide the court in the exercise of its power to sanction a scheme of arrangement:

“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 All ER 1006 at 1012, [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,...

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    • 29 July 2019 embark upon an extensive citation of authority. The relevant principles are summarised in Re TDG [2009] 1 BCLC 445 at [29] and in Re Noble Group [2018] EWHC 3092 at 41 However, given the arguments presented at the hearing it is perhaps worth setting out at length the observations of Lin......
  • Robert Nicholas Jason Schofield v Matthew David Smith
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    ...had the effect of curtailing the risk of the scheme being undermined by a collateral attack; (3) Re Noble Group Limited and another [2018] EWHC 3092 (Ch) in which Snowden J, at [24]–[25], again emphasised that officeholder releases by creditors, usually through the mechanism of a deed of r......
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    ...qualifications set out in the second paragraph, the court ‘will be slow to differ from the meeting’.” 52 In Re Noble Group Limited [2018] EWHC 3092 (Ch) at [17] I paraphrased those requirements as a four-stage test as follows: i) the court must consider whether the provisions of the statut......
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