Monday 26 September 2016

Petroceltic fights back in fresh row over executive pay

Staff poised to vote down examinership in plan that may have wider implications

Published 29/05/2016 | 02:30

'Staff at Petroceltic, including CEO Brian O Cathain, are poised to make the rare move at a creditors’ meeting tomorrow'
'Staff at Petroceltic, including CEO Brian O Cathain, are poised to make the rare move at a creditors’ meeting tomorrow'

Staff at stricken exploration company Petroceltic plan to vote against efforts to save the company through examinership following a bitter take-over battle with Worldview, its largest shareholder.

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It is rare for staff, at risk of losing their jobs in the event of a failed examinership, to vote down a survival scheme.

However staff at Petroceltic, including CEO Brian O Cathain, are poised to make the rare move at a creditors' meeting tomorrow in a case that could have major implications for future examinerships.

This is because a major legal issue has emerged over whether packages due to executives in the event of any change in control of the company were existing or future liabilities at the time Worldview presented its petition to place the company into examinership.

The examinership process is designed to ensure a company's survival by writing down existing or past liabilities.

However, Petroceltic staff are set to oppose the survival plan on the basis that their pay packages constituted future liabilities - which cannot be written down in examinership - at the time Worldview sought court protection.

An interim examiner was appointed to Petroceltic last March and a proposed scheme of arrangement has now been put in place by examiner Michael McAteer of Grant Thornton.

Under its terms, staff payouts due on any change of control of the company - understood to come to a cumulative total of more than $4.5m - are to be nearly wiped out with 5pc of the contractually agreed amount to be paid. However, this element of the survival scheme is robustly opposed by Petroceltic.

As part of a takeover offer tabled by Worldview subsidiary Sunny Hill earlier this year, Sunny Hill said it expected "to significantly reduce the Petroceltic Group's staffing levels" adding that employment rights would be observed "at least to the extent required by law".

In principle, the staff's last stand should not impact on the survival scheme.

This is because the approval of one class of creditor is required for a judge to be able to give final approval.

However the vote could reignite the row.

Petroceltic's secured creditor class, comprising Worldview and London-based Elbrus Capital, will approve the scheme which will shortly come before a High Court judge who will decide to approve the plan or place the company in liquidation.

The company has 32 group staff and also employs over 130 employees and contractors worldwide through related operating companies.

All will lose their jobs in the event of a liquidation.

Sunday Indo Business

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