Cargill International v Solid Energy New Zealand Ltd and others [2016] NZHC 1817
The attempt by a creditor to overturn the deed of company arrangement entered into by creditors of Solid Energy has been unsuccessful. This is an important decision as it is one of the few decisions in this area, was argued by experienced counsel and has a comprehensive and thorough judgment.
The Court found that there was no basis for suggesting that the administrators lacked independence (having disclosed a previous involvement with various parties including the lenders), and there was no unfairness in the classification of the plaintiff company as a participant creditor rather than a trade creditor.
The Court noted that it would be unrealistic and inefficient to expect a specific analysis of the benefit each creditor offered to the deed of company arrangement process, no matter how small their claim. A pragmatic but reasonable approach was acceptable.
There was also a finding that the lenders were not treated in a way that unfairly prejudiced the plaintiff, as their cost recovery and indemnity rights are proportionate to the significant role they play in implementing the scheme.
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