BROAD SUPPORT
The judicial commissioner said he was of the view that the application by mm2 has been “made in good faith” and there exists sufficient evidence of broad creditor support.
Linkwasha said there were insufficient details, including how the claim that 28 per cent of the debt owed to creditors was computed.
The judicial commissioner said these were not unfair questions, but added that to ask for full details at a preliminary stage could be seen as demanding the impossible.
“The (most important reason for) a moratorium in cases such as these is often to create the breathing space necessary for such a scheme to be refined and crystallised, free from the immediate pressure of creditors at the company’s neck,” he said.
“A moratorium is, in some ways, the quiet harbour in which a distressed enterprise can seek to steady itself, take stock, and chart a course towards a fair and workable restructuring.
“In that sense, it is invariably going to be the case that in many of these cases, any proposal that is expected to eventually be put before the creditors would still be in the process of being worked through.”
He said that although the proposal put forward by mm2 was “clearly missing some aspects”, as pointed out by Linkwasha, it was sufficiently detailed and “provided a fair insight” into how a restructuring would be able to yield greater collective benefit to the creditors than if mm2 were to be wound up.
The entertainment company has also provided sufficient evidence of creditor support, the judgment said.
