The Supreme Court of Bermuda has sanctioned a scheme of arrangement that will see Digicel founder and chairman Denis O'Brien lose most of his stake in the telecoms group.

The scheme primarily consists of a nearly $1.8 billion debt-equity swap as well as a $110 million rights issue.

Lawyer Rhys Williams, of Conyers, represented Digicel International Finance Limited, Digicel Intermediate Holdings Limited and Digicel Limited before Narinder Hargun, the Chief Justice, in the Supreme Court on Monday.

Mr Williams said the scheme had the overwhelming support of creditors.

He added that it will allow the group to continue as a going concern.

Nicholas Howard, of Walkers, and Kehinde George, of ASW Law, attended the hearing on behalf of an ad-hoc creditors’ group, and indicated their respective clients’ support for the scheme.

The Bermuda proceedings will now be put in front of Judge John P. Mastando III on Wednesday at a recognition hearing in the United States Bankruptcy Court for the Southern District of New York.

He will be asked to recognise the Bermuda proceedings. If he does so, Chapter 15 bankruptcy proceedings in New York will come to an end, and it will then be up to the parties to implement the scheme in Bermuda.

The Irish Times has reported that the restructuring deal will see bondholders convert their investment into an initial 62 per cent stake. It could increase to 90 per cent as the bondholders-turned-equity participants take part in a $110 million rights issue and further backstop agreement.

The news group said the restructuring will leave Mr O’Brien with a board seat and eventually 10 to 20 per cent of the company.

Digicel would come under the control of the bond investment firms, including US-based PGIM, GoldenTree Asset Management and Contrarian Capital Management.

The scheme was necessitated in large part because of economic disruption and public unrest in Haiti, which created instability that put a huge hole in earnings from one of the company’s key mobile phone markets.

Digicel operates in 25 markets including Bermuda.