Orpea has formally applied to the commercial court of Nanterre to cram down creditors that have resisted the troubled care homes operator’s proposal to carry out an accelerated safeguard plan, which will see French state vehicle Caisse des depots et consignations take control of the business.
Under this new French bankruptcy process, a debtor can ask the court for permission to carry out this measure. However, last month, a rebel group of creditors sought to delay the action after saying an initial vote to proceed with the measure needed to be re-run.
The creditors backing the CDC offer represent more than half the unsecured debt. But the rebel group, led by Fortress Investment Group, Kite Lake Capital, Kyma Capital, LMR Partners and Whitebox Advisors, has said that 49% of unsecured creditors by value opposed the deal.
The rebel group’s complaint about the composition of the creditor voting classes, which had been upheld by the Versailles court of appeal, did not prevent the company from carrying out its initial vote on the process, which had been supported by most stakeholder classes.
The rebels said the votes mixed up the secured and unsecured creditors together, meaning more classes approved the deal. They have called for the Nanterre court not to sanction the cramdown procedure on these grounds.
CDC has pledged to invest €1.355bn alongside other new investors following a debt-for-equity swap, leaving it with a 50.2% stake in Orpea. The rebel creditors have called the proposed deal a “stealth nationalisation”, which might put off international investment in France.
“This should not be sanctioned without the consent of all classes,” the rebel group previously said. “This development is even more concerning for unsecured creditors invested in France, with the Orpea restructuring process continuing to set a terrible precedent.”
The scheduled end of the accelerated safeguard period is July 24.