A $1.3bn business trading across multiple sectors and jurisdictions was exposed to foreign exchange risk and an urgent application to Court for a provisional liquidation to protect the group against material loss was made. We successfully assisted our client in preventing an uncontrolled enforcement process.
The client & the situation
A British Virgin Island domiciled holding company for a global integrated food and agricultural business. The business was established in late 2000 and has since grown to a c.US$3.1bn business trading across agrifoods, resources and consumer brands with c.100 corporate entities located across the continents of Europe, Africa, Asia, Australia and North America. Given the global nature of the Group's business, it is exposed to foreign exchange risk which it has historically sought to manage by purchasing and hedging forward exchange contracts on currencies and commodities.
What we did
We were engaged by the principal shareholder of PCPL and CEO of the group to support with an urgent application to Court for a provisional liquidation to protect the group against material loss claims from Foreign Exchange ("FX") derivative counter-parties (consisting of over 40 international banking and financial institutions) in relation to trades entered into by the group's FX trading desk that had become "out of the money". The claims were made against the holding company, PCPL. Our client was concerned that there was a risk that each of these creditors at any point may seek to commence separate enforcement proceedings against PCPL, PGD or PPL. Any such action by one creditor or a small group of creditors could allow them to gain an unfair advantage against others and lead to an inefficient and value eroding process.
We quickly mobilised an experienced team to support our client with the following objectives:
- Preparing a report to Court to support provisional liquidation application in the UK, Dubai and Singapore.
- Liaise with / direct Counsel to prepare witness statements in support of the Court applications.
- Manage relationships and communications with over 40 international banking and financial institutions.
Ultimately due to an inability to access pertinent group
financial information in a timely manner as a result of the global
lock down caused by the COVID-19 pandemic, our client resolved
instead to place the holding company, PCPL into voluntary
liquidation. We helped facilitate this process.
We successfully assisted our client in preventing an uncontrolled enforcement process by a diverse group of creditors pursuing different agendas which would have led to significant value erosion across the rest of the group.
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