Terry McCrann: Real court does the right thing to keep Virgin alive
The Federal Court has dealt with Virgin bondholders in a process that was swift and clean, sensible, decisive, effective and exactly correct, writes Terry McCrann.
Terry McCrann
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A real court, the Federal Court, has appropriately, speedily and effectively dealt with the attempt by – some of – the Virgin bondholders to get their counter-proposal for reviving the airline put before creditors.
On their application, Judge Middleton has refused to give them exclusive advanced access to the detail of the deal that the Virgin administrator Deloitte has signed with the investor group led by Bain Capital.
However Judge Middleton also pointed out the bleeding obvious – two BOs actually.
One, that they have every right to put their proposal before all the creditors at the meeting called to approve the Bain deal on August 22.
I might note that this means anyone else has exactly that same right – although there is precious-to-zero prospect of that happening; and I would be very, very surprised if even the (desperate) bondholders were able to come up with anything credible.
Deloitte might not have secured the best possible deal for the $6.8 billion of Virgin creditors when it signed the deal – binding both sides, subject to that creditor approval.
But the ‘second wave’ in Victoria, all-but shutting down one of the world’s top aviation routes of Melb-Syd for at least six weeks and who knows how much longer, has made it a deal that Deloitte would not now get out of Bain.
The second BO from the judge was that the bondholders would have plenty of time to see what Deloitte/Bain were proposing because Deloitte had to give all creditors the detail of the deal and plenty of time to think about it.
That was a big hint to Deloitte, which the judge indeed explicitly spelt out: “If sufficient information is not provided which is material to creditors in reaching a decision …. this could be a ground for the court to later terminate the DOCA (the Bain deal). “Neither of these scenarios is desirable.”
Indeed. I’m pretty confident that Deloitte will do the right thing. I’m even more confident that the Bain deal will look better in direct inversion to the state of the aviation market. Deloitte will be desperate to not do anything which could jeopardise it.
The court process was swift and clean, sensible, decisive and effective – and dare I suggest, exactly correct. Contrast that with the hopelessness of the Takeovers Panel.
The bondholders also made a totally inappropriate application to the Panel to interfere in the Virgin administration. The Panel made an even more inappropriate decision not to reject it immediately.
The Panel announced the application on Monday July 6. The Panel pondered and came out with: “A sitting Panel has not been appointed at this stage and no decision has been made whether to conduct proceedings.
Nothing further was heard from the Panel until late Friday July 10 when it disclosed it had consented to a request by the applicants to withdraw.
And, oh, by the way, it got around to disclosing that a sitting panel had been appointed – a disclosure that came after the whole thing had gone away.
The Panel, moving with all the alacrity of 19th century real time will publish its reasons for allowing the withdrawal in “due course”.
But there was no word on whether it would (try to) explain its idiocy in not rejecting the absurd try-on upfront.
Originally published as Terry McCrann: Real court does the right thing to keep Virgin alive