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Madagascar Oil - Case Update

The High Court has released its reasons for ordering that two separate meetings be convened to vote on the proposed Part 26A restructuring plan of Madagascar Oil — one for each creditor — despite their similar ranking under the relevant alternative.
The plan affects just two creditors: (1) BMK Resources, Madagascar Oil’s parent and principal funder, and (2) Outrider Master Fund, a distressed debt investor currently in voluntary liquidation. The plan is designed to restructure $71.25 million in liabilities owed to Outrider and enable BMK to inject new capital to restart oil production at a stalled oilfield in Madagascar.
The central issue at the convening hearing was whether Madagascar Oil could justifiably convene two separate meetings — one for each creditor — despite the fact that the relevant alternative was a Mauritian liquidation in which BMK and Outrider would rank pari passu.
The Court agreed to two separate meetings, holding that the rights granted under the plan were materially different and justified separate classes: BMK would forgo substantial claims and contribute new capital, while Outrider would receive a modest cash payment or long-term revenue share in exchange for writing off its claim. Highlighting the practical and commercial rationale of the restructuring, the Court stated that “BMK is the only rescue vessel in sight”.
The Court was also satisfied that the proposed plan met the statutory requirements under section 901A of the Companies Act, that Madagascar Oil had a sufficient connection to the UK (as the debt documents were governed by English law), and that no jurisdictional roadblocks existed to prevent the restructuring from proceeding to a sanction hearing, which is scheduled for 21 May.
Read the decision HERE.
Professionals involved:
Mark Phillips KC, Matthew Abraham and Rabin Kok of South Square (instructed by Shoosmiths) for Madagascar Oil
Matthew Weaver KC of Radcliffe Chambers (instructed by Trowers & Hamlins) for Outrider Master Fund