afgha holders representation at crs meetings, page-6

The key issue would seem to be whether the charge that the banks have could be challenged. If it cannot, or any challenge is unlikely to be successful, then that is the end of the matter. The receiver does their job and then the administrator gets to clear up afterwards. Noteholders might get something but it is in the hands of the receivers.

If the charge can be challenged then there would seem to be two options.

The first option is to appoint a liquidator - which would be backdated to 4 November - and get them to challenge the banks' charge. It may be possible to get the charge lifted as it was granted less than 6 months earlier. To me, that would seem to be preferable as the receiver only has to look after the banks whereas the liquidator has to look after everyone. Even if the charge is lifted, the banks might still have superior ranking but my reading suggests that subordination is difficult to enforce and therefore there is a faint possiblity that the debts could rank equally with the senior debt (which would be just about the best case scenario for noteholders).

The second option is a Deed of Company Arrangement. I think Noteholders might be happy to accept a partial write down or perhaps an exchange for some equity. The banks might agree to the DOCA if they are worried about the liquidator being able to overturn their security position.

I have read enough though to make me think that there probably are enough grounds to challenge the charge and, given the likely returns otherwise, there is little to lose by having a go.

The question is then: how confident are the banks that the charge they have is solid? If they are not confident I think we may see a DOCA offered that could be accepted by creditors. However, if the banks are confident expect the DOCA to be rejected and a liquidator appointed.

I'd like to see a succesful DOCA (depends on what terms though) but I think the appointment of a liquidator more likely.

I do however think:

1) shareholders will see nothing; regardless of the outcome of any of the above
2) some lawyers will make some pretty good money out of this.

Please bear in mind I am no expert. The banks can pay (and probably are paying) expensive lawyers who have been experts for years. I, on the other hand, am relying on free stuff on Google that I found over the last week.

Anyone else care to comment?