Mayer Brown, a global leading law firm, today announced The Vietnam Shipbuilding Industry Group ("Vinashin"), a Vietnamese government-owned company registered in Vietnam, yesterday successfully applied to the High Court for sanction of a scheme of arrangement with certain of its creditors pursuant to a US$600 million facility.
Vinashin was the 5th largest shipbuilder in the world in 2008 and had liabilities of more than US$4.5 billion at the commencement of its financial restructure. Vinashin successfully entered into consensual arrangements with other domestic and international creditors as part of its overall financial restructuring plan. The Scheme became necessary due to the creditors of the US$600 million facility being unwilling to accept Vinashin’s debt restructuring proposals.
John Marsden, Managing Partner of Vietnam and Departmental Managing Partner, Commercial at Mayer Brown who led the team advising in Vietnam, said: "This is a milestone for Vietnam’s shipping industry as well as its debt market. It sets a precedent for future restructuring route maps and will have a far-reaching positive impact on foreign investors' confidence in Vietnam.”
Vinashin came under severe pressure from some of its loan creditors, who brought proceedings in the UK for summary judgment. Having successfully applied for a stay of those proceedings, the scheme was ultimately approved by creditors at a meeting in Singapore on 5 August 2013 and sanctioned by the High Court yesterday. The court held that it had jurisdiction to sanction the scheme even though Vinashin had no operations or assets in the UK because the loans were governed by English law and subject to the non-exclusive jurisdiction of the English courts.
Devi Shah, joint head of restructuring at Mayer Brown in London said: "This is the first time that a court has used its discretion to stay proceedings at an early stage so that a scheme can be put forward and the first time that a Vietnamese company has made use of an English scheme of arrangement as a restructuring tool. This case is an excellent example of the flexibility of a scheme of arrangement to assist the restructuring of any company with a sufficient connection to England and of the English Courts' 'can do' approach when it comes to restructurings proposed for the benefit of a company's creditors as a whole."