We have been involved in some of the most important and complex insolvency matters in Australia’s corporate history. Some recent examples are listed below.
Sons of Gwalia
Freehills acted for the deed administrators of Sons of Gwalia, dealing with all aspects of the administration including two major litigation cases arising from the administration. The first being an action brought against the companies’ former auditors, Ernst & Young and certain of its former directors, the second being a representative action by the shareholders against Ernst & Young for the losses they suffered in investing in the company.
The Administrators settled both actions in late 2009 for a total of $178m, one of the highest settlements of its kind in Australian legal history. The settlement involved SOG entering into a scheme of arrangement which released all shareholder claims against Ernst & Young and the directors. The scheme of arrangement involving such releases was the first of its kind in Australia.
Centro Property Group
Freehills acted for Centro Property Group and Centro Retail Trust on the refinancing of their bank facilities which involved negotiating with large banking syndicates in Australia and the United States, the creation of a debt for equity hybrid instrument (representing $3b value), the sale of various key assets and constant monitoring of the solvency position of the company.
We have been involved in defending a class action brought by investors whilst at the same time designing a holistic restructuring of the group involving a re-composition of its assets and debt structures. Once completed, it will represent perhaps the largest corporate restructuring in Australian corporate history.
Elders
Freehills advised Elders on its comprehensive recapitalisation and debt refinancing. This involved negotiation of waivers and extensions of existing facilities followed by the successful implementation of a multi-pronged strategy comprising:
- the debt restructuring of over A$1.2 billion of bank debt and US private placement notes
- the sale of Elders insurance operations to QBE
- a capital raising of $550 million through an underwritten placement and share purchase plan,and
- the sale of Elders timber processing operations to Gunns.
The Freehills team advised the Board of Elders and the Boards of its subsidiary companies on all aspects of the transaction and brought Mergers & Acquisitions, Equity Capital Markets, banking and finance and insolvency/restructuring expertise to bear in order to execute a restructure and deleveraging of Elders, a complex corporate group. The banking arrangements were complex and involved extensive negotiations with various bank lenders and the US private placement noteholders.
Prime Infrastructure Holdings (formerly Babcock & Brown Infrastructure)
Freehills advised Prime Infrastructure Holdings Limited (formerly Babcock and Brown Infrastructure Limited) in connection with it’s A$5.1 billion recapitalisation. The deal involved:
- a $1,500 million equity raising
- the transfer of a 49.9% economic interest in Dalrymple Bay Coal Terminal
- the sale of Prime Infrastructure’s interest in PD Ports
- the repayment and restructuring of Prime’s corporate debt facilities
- the partial refinance and restructure of the WestNet Rail debt facilities
- the restructure of Prime’s holdings in AETandD and CSC
- the simplification of Prime’s existing capital structure, a triple stapling, and
- the internalisation of Prime’s management.
Bill Express
Bill Express was one of the largest bill paying service providers in Australia, and when it was placed in administration in July 2008 (and subsequently went into liquidation) it had a shortfall of $250m. We have been acting for the liquidators of Bill Express in recovering assets for the benefit of creditors, and most recently have conducted a public examination of its directors and officers, its auditors, and various creditors, as part of a process of compiling evidence to launch a raft of recovery proceedings.
In doing so, we have had to deal with complex retention of title claims, creditor preference claims, auditor liability issues and liaised with ASIC in respect of possible actions against directors and officers.
Chatswood Transport Interchange
Freehills is acting for the Commonwealth Bank and PPB as receivers of the Chatswood Transport Interchange involving the completion of a $300m development at Chatswood on Sydney’s north shore and enforcement of the Bank’s rights under a complex financing and development structure. Freehills is also acting for bank in proceedings arising from the failure of a contracting party to complete the acquisition of the retail component of the development.
A key challenge involved working with the receivers and the Bank in negotiations with the NSW Government to satisfy the Government’s requirements and secure title to the development.
Bell Group
The Bell matter is the largest and longest-running commercial trial ever held in Australia. We act for 20 banks in defending claims for in excess of A$1.5 billion by companies in the Bell Group and their liquidators in the Supreme Court of Western Australia. There has been a large separate dedicated trial team of over 30 Freehills lawyers co-ordinated from offices in Melbourne, Sydney and Perth. The trial, which ran for more than three years ended in late September 2006 and judgment delivered in September 2008. The matter is now the subject of appeal.
Babcock & Brown
Freehills acted for Babcock & Brown Ltd (BBL) and Babcock & Brown International Pty Ltd (BBIPL) in relation to the restructuring of BBIPL’s A$3.25 billion bank debt and the proposed restructuring of BBL’s Australian and New Zealand notes debt.
Restructuring the bank debt (for a syndicate of 25 Australian and foreign banks) involved working closely with the board, senior management and investment bank advisers to guide them through the difficult solvency issues which the group faced, identifying possible restructuring options which enabled both the bank syndicate and the directors to feel comfortable with proceeding, and negotiating on behalf of the company the relevant amending documentation.
Harris Scarfe
Freehills acted for an Australian bank and the receivers and managers of the Harris Scarfe Group in its pursuit of the auditors. The claim raised complex legal and factual issues relating to causation and loss, auditors’ duties, liabilities of directors and officers and business valuation. The case was also complicated by the fact of the fraud which required a complex reconstruction of the financial accounts of the companies to be undertaken.
HIH Insurance
Freehills acted for the underwriters of the directors and officers’ liability policy of the HIH Group. The liquidation of the HIH Group, one of Australia’s largest general insurers and reported to be Australia’s largest corporate collapse at over A$5 billion, led to various issues and queries as to the manner in which the insurance and financial services industry is regulated in Australia. We have been involved in all aspects of this matter, including the HIH Royal Commission. The sheer scale and complexity of the issues surrounding the collapse of the HIH Group meant that the Freehills defence team drew on the breadth of the firm’s insolvency, corporate insurance, regulation and large-scale litigation expertise.
