Petroceltic could become oil sector test case
Petroceltic's examinership could pave the way for more battered explorers to use the insolvency process here survive the oil crash.
The High Court appointed Michael McAteer of Grant Thornton as interim examiner to troubled exploration company Petroceltic and two related companies yesterday.
Mr Justice Brian McGovern made the appointment on the application of the company itself and of a minority shareholder, Worldview.
The parties have been in a long-running dispute, culminating in Worldview's unilateral move last week to seek court protection for Petroceltic from its creditors, without telling management.
The examinership process will give Petroceltic 100 days to come up with a rescue plan for the business. The plan can be approved by the courts if it saves jobs and results in a viable business emerging.
Uniquely in Europe, Ireland's examinership rules allow a company to walk away from debts, without handing control or assets to lenders, if the court is convinced that will save the business and as long as the outcome for lenders is no worse than it would be under an alternative liquidation.
Petroceltic can use the examinership process because its centre of main interest (Comi) is in Ireland, despite the company being registered in Jersey and its debts issued under UK rules - known as London documentation.
A successful rescue could see other battered oil firms seek court protection in Ireland, if they establish a base here.
Worldview EHS International Master Fund, with registered offices in the Cayman Islands, sought protection for Petroceltic International plc and related companies, Petroceltic Investments Ltd and Petroceltic Ain Tsila Ltd. Petroceltic employs 13 staff at its HQ at Grand Canal Street Upper, Dublin, and 128 more around the world.
Based on an independent expert report, the court heard the companies have a viable future as a going concern subject to certain conditions including approval of a survival scheme.
The petition had been returned to April 4 but Rossa Fanning BL, for Petroceltic, told the judge yesterday his side was not opposing examinership as they considered that in the interest of the companies. Worldview said it will cover costs of examinership not met by Petroceltic's own income.
A syndicate of four banks owned $230m by Petroceltic indicated they were not contesting the application but reserved their position regarding the examinership. A sale process already under way is set to run alongside the examinership.