Noble's debt restructuring plan hit by suspicions

A wording on the “full release” of claims by senior creditors could absolve Noble legal debt claims.

According to Bloomberg, experts are raising concerns about Noble’s debt restructuring plan. On page 5 of Noble’s restructuring term sheet, a clause states that the arrangement provides the “full release of any and all other claims” that any senior creditor may have against Noble Group, its management, directors, advisers, agents and representatives in relation to its existing senior debt.

“Such language aims to absolve Noble, its advisers and representatives from claims or legal action related to its senior creditors’ pre-existing debt securities,” said Basil Hwang, a managing partner at Hwang Hauzen LLP, who specializes in financial regulation.

Release clauses like the one in Noble’s proposal aren’t unusual in schemes of arrangements, the kind of court-led procedure that the company is pursuing. And any final interpretation would rest with the courts.

Still, it could be a hurdle for investors contemplating legal action against Noble, which has been dogged for years by criticism over its accounting methods. Noble’s auditor warned last week that the company may not be able to continue operating after it posted a $4.94 billion full-year loss.

Read the full report here.