NEW ZEALAND Law and Practice Contributed by: David Weavers, Alex MacDuff, Matt Consedine and Verniel Virtucio, Russell McVeagh
• structured/pre-pack business or asset sales; and • debt-for-equity transactions and credit bid - ding. Common considerations for private credit out- of-court restructuring will include: • the need for a balance sheet and operational restructuring; • obtaining an insolvency estimated outcome opinion from a licensed insolvency practi - tioner to support the financial component of a balance sheet restructuring; • the ability of the borrower to deliver assets clear of encumbrances without the need for a statutory cramdown mechanism; • the cash position of the group and the need for, and availability of, new funding; • risks of challenge to the transaction from stakeholders (which may depend on which stakeholders the restructuring is imposed upon); • ability for the debtor company/group of com - panies to deliver major transaction approval if necessary (which is the approval of 75% of the company’s shareholders); and • in contrast, the challenges with maximising returns in an enforcement counterfactual, including if part of a loan-to-own strategy (where OIO considerations may be relevant if there is an overseas private credit lender). 7.9 Dissenting Lenders and Non- Consensual Restructurings Creditors’ compromises, DOCAs under volun - tary administrations and schemes of arrange - ment are procedures which can impose non- consensual restructuring on dissenting lenders/ creditors (see 7.1 Impact of Insolvency Pro- cesses and 7.4 Rescue or Reorganisation Pro- cedures Other Than Insolvency for thresholds
required to impose cramdowns). Whilst cross- class cramdown is not available in New Zea - land, creditors vote in a single class in voluntary administration (however secured creditors and lessors of property cannot be bound by a DOCA unless they vote in favour of it). In each procedure, dissenting creditors have available procedures to challenge the compro - mise that was reached: • DOCAs can be challenged and subject to termination on various grounds including if the DOCA was unfairly prejudicial or discrimi - natory against a creditor; • creditors can apply to the High Court for orders that they are not bound by a creditors’ compromise on limited grounds including that the compromise was unfairly prejudicial to that creditor or their class; and • challenges from a creditors’ scheme of arrangement will typically be in relation to class composition, procedural issues, wheth - er the scheme was “fairly put”, and if the class of creditors was fairly represented at the scheme meeting. 7.10 Expedited Restructurings Pre-pack restructurings are permitted in New Zealand, although they are less commonly employed than other jurisdictions because: • New Zealand does not have a regulatory framework for pre-packs, unlike SIP 16 in the UK; • careful structuring will be required to imple - ment a pre-packaged sale given a receiver’s duties to obtain the best price reasonably obtainable at the time of sale and a voluntary administrator’s duty to act in the best inter - ests of all creditors;
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