Blockchain meets tradition: Argo's old-school meeting problem

Quick read

Argo Blockchain plc, a cryptocurrency mining company, recently had its restructuring plan sanctioned, restructuring US$40 million of unsecured notes, compromising secured debt and injecting new money to facilitate a rescue by Growler Mining.

Meeting for one?

In restructuring plans, creditors vote by class based on their rights and often submit proxies to the Chair of their class meeting specifying their vote.

The noteholder meeting faced a fundamental problem: no noteholder attended, leaving only the Chair with proxies. Despite the proxies approving the plan, the court held that no valid meeting occurred as a meeting requires two or more persons. This forced the court to exercise its cram-down power to approve the plan.

This finding has triggered criticism in a world where proxy voting is common and marks a divergence from the more pragmatic approach taken by the Scottish court.

Gifting is allowed

The Court held that post-Petrofac, Growler, as the party contributing the greatest share of the restructuring benefit, could 'gift' equity to the noteholders and shareholders from its own allocation.

NASDAQ listing

NASDAQ initially considered whether the plan was in the nature of a bankruptcy requiring delisting. It accepted that a restructuring plan was not a "comparable foreign law" to US bankruptcy law and Argo could retain its listing.

Key takeaways

Companies proposing a restructuring plan should ensure more than one person attends class meetings.
The court will consider fairness of value distribution but rejected the notion that shareholders should receive no recovery unless creditors are first paid in full (no absolute priority rule).
English restructuring plans can be compatible with preserving a company's NASDAQ listing.