Noble Group Limited – Global Commodity Traders File for Chapter 15, Pursue UK and Bermudian Schemes of Arrangement

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October 17, 2018 – Noble Group Limited (“Noble” or the “Company”) filed for Chapter 15 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 18-13133. [Docket No. 1] The Company, a London-based, global commodity traders incorporated in Bermuda, is represented by Marc Kieselstein of Kirkland & Ellis. In its Chapter 15 Petition, the Company stated that it intended to propose inter-conditional schemes of arrangement to its creditors under Part 26 of the Companies Act 2006 of England and Section 99 of the Companies Act 1981 of Bermuda and that the Chapter 15 proceedings were filed in order for the Company to obtain recognition of the English scheme as a foreign main proceedings. 

On October 16, 2018, the Company announced that it had been granted permission by UK and Bermudian courts to convene “scheme meetings” (ie meetings of impacted creditors) on November 8, 2018. The Company is under pressure to meet an extended longstop date of November 27, 2018 in respect of commitments it has made to creditors under a restructuring support agreement.

In documents filed with the UK Court, the Company highlighted a downward spiral predicated on a fall in commodity prices and exacerbated by increasingly more difficult access to capital. The UK documents state, “The difficulties faced by the Group, which have ultimately led to the need for the proposed Restructuring, began with the industry-wide fall in commodity prices throughout 2014, 2015 and early 2016, and the corresponding reduction in the availability of bank debt and other financing, as financing providers reduced their exposure to the sector. During this period, the Group experienced reduced access to financing, downgrades from credit rating agencies and a resulting increased cost of financing of its physical commodities trading activities. For the financial years ended 31 December 2013, 2014, 2015 and 2016, the Company had reported declining earnings of profit/(loss) for the respective financial years of approximately US$ 238.5 million, US$ 132.5 million, US$ (1.7) billion and US$ 8.1 million. In particular, in 2015 the Company reported a net loss of US$1.7 billion, including non-cash asset impairments and write-downs in the accounting value of its long-term physical commodity contracts. In early 2016, the Company lost its investment grade credit rating, causing the Group’s financing arrangements to become increasingly more restrictive, via additional financial covenants and higher costs of funding….[For 2017] the Company reported a net loss from continuing operations of approximately US$3.9 billion and a total loss for the year of approximately US$4.9 billion after including losses from discontinued operations of approximately US$1.0 billion. The Group had total negative equity of approximately US$800.9 million as at 31 December 2017 as its total liabilities of approximately US$5.6 billion had exceeded its total assets of approximately US$4.8 billion as at that date.”

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