Weil navigates helicopter company through Cayman uncertainties as part of global restructuring

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In a recent eagerly anticipated and highly significant ruling, the Grand Court of the Cayman Islands allowed the helicopter group CHC to appoint provisional liquidators over the group’s parent as part of the group’s Chapter 11 Plan implementation without having to solicit shareholder authorisation.

Weil, together with Cayman local counsel Appleby, navigated CHC Group Limited through existing uncertainties in Cayman law caused by the English common law ruling in the 1978 case of Emmadart which had been followed by the Cayman Grand Court as recently as 2015 in the case of China Shanshui.  Prior to the ruling, there was significant uncertainty as to whether a board of directors could appoint provisional liquidators without shareholder approval or authority from its constitutional documents.

On 17 January 2017, the Cayman Court ordered that Stuart Sybersma and Neville Khan from Deloitte could be appointed as CHC’s joint provisional liquidators following a winding up petition which had been filed by a creditor.

In considering the common law position and the wider context of the plan which had been proposed by CHC Group Ltd in its Chapter 11 process in the U.S., Justice McMillan found it significant that the purpose of the application in CHC’s case was an intention to present a compromise or arrangement to the company’s creditors that would allow the company to continue working and found that there was “no conceivable basis for inferring that the application for the appointment of joint provisional liquidators made on behalf of the company itself is contrary to law or contrary to good practice.”

Global helicopter group CHC had been in Chapter 11 proceedings in the US Bankruptcy Court for the Northern District of Texas since May last year with Weil acting as debtor counsel to the group. As at the date of the Chapter 11 petition, CHC had outstanding funded debt obligations of approximately USD 1.6 billion. CHC is one of the world’s largest helicopter services companies with a fleet of more than 220 aircraft operating on six continents.

The restructuring plan submitted to the Texas court was dependent on a restructuring of the Cayman parent company and, following a review of the proposal by the joint provisional liquidators, Weil returned to the Cayman Court in February to successfully obtain an order pursuant to section 99 of the Companies Law (2016 Revision) that no disposition of the property of the Cayman entity effected pursuant to the Chapter 11 plan would be void. The two rulings together enable the global restructuring of CHC to take effect once the Chapter 11 plan was confirmed by the Texas Court on 3 March 2017.  CHC successfully exited Chapter 11 on 24 March 2017.

On the success of the two applications in Cayman, Adam Plainer Head of Weil’s London Business Finance & Restructuring team said “we are pleased to have been able to assist with this crucial step which unlocks the wider restructuring and without which there may have been doubts as to whether the Chapter 11 plan could have proceeded as originally anticipated”. Weil Counsel Linton Bloomberg said “working closely with local counsel and our colleagues in New York and Dallas was critical to being in a position to present the necessary information and arguments to the Cayman Court which ultimately led to the necessary Court approval.  The fact that the decision clears up uncertainty will clearly be of interest to banks, bondholders, investors and debtors where a debtor’s parent entity is incorporated in the Cayman Islands”.

 Weil fielded a team led by Co-Chair of the Business Finance & Restructuring Department Gary Holtzer and Kelly DiBlasi in New York, Stephen Youngman in Dallas and, in London, Head of London Business Finance & Restructuring Adam Plainer working with Counsel Linton Bloomberg and assisted by associates Kirsten Erichsen and Lindsay Merritt.