Sep 2014
BERMUDA
SUPREME COURT
SECTION 99 OF THE COMPANIES ACT, 1981 – NOTE CREDITORS – CONTINGENT CREDITORS – DEFINITION OF CREDITOR
Applications for directions in relation to convening meetings at which schemes of arrangements will be proposed to a company’s creditors or shareholders are typically an uneventful, ex parte, affair. At the hearing of the present application by the Company under Section 99 of the Companies Act, 1981 (the “Act”) for leave to convene meetings of creditors in Hong Kong to consider and potentially approve a scheme of arrangement, counsel for the Company and the Joint Personal Liquidators (“JPLs”) both addressed the Court, inter alia, on the apparently novel Bermudian law point of the ability of Note-Holders to vote as contingent creditors at their class meeting. It was common ground that this Court should follow persuasive judicial authority and practice from a variety of common law jurisdictions and permit voting on this basis. However, a problem arose because the Court had previously decided that Note-Holders who did not actually hold notes did not qualify as contingent creditors for the purposes of presenting a winding up petition: Re Bio-Treat Technology Limited [2009] SC (Bda) 26 Civ (28 May 2009); [2009] Bda LR 29 (Bell J). Counsel was accordingly compelled to distinguish the present case from Re Bio-Treat Technology Ltd and/or to demonstrate why it ought not to be followed.