Cooperation and innovation saved a Bermuda-based company from collapse It was creativity and innovation on the part of a Bermuda team of lawyers and accountants that saved a locally based satellite company from failing earlier this year.

Partners Robin Mayor and David Cook, along with associate Brian Holdipp of law firm Conyers Dill & Pearman, put their heads together with Malcolm Butterfield, Michael Morrison and Katherine Robson of the accounting firm KPMG, and pulled off a coup for Bermuda and New ICO.

The case showed, both domestically and internationally, that Bermuda "has grown up as a jurisdiction'' according to those involved, and has provided a framework for other companies to re-organise and re-structure.

"When one hears of provisional liquidation or re-structuring they immediately class that as bad news,'' said Malcolm Butterfield former registrar of companies who worked on the team for KPMG.

"I think that this case shows that it can be good news and secondly that everybody; the legal advisors, the judiciary, the registrar of companies, the accountants all worked together to show that Bermuda has grown up as a jurisdiction and can deal with not just bringing new big players to the table, but that we can also restructure problems and come out with a positive result.'' The ICO Group of companies was capitalised in excess of $3 billion, but when it ran out of funds investors and creditors would have had little chance of recouping anything.

"Bermuda, unlike a number of other major jurisdictions, doesn't actually have any interim procedure for when a company is facing difficulties,'' said Robin Mayor, a lead lawyer on the case.

"It's either a going concern or bankruptcy, there's nothing in-between. The challenge that faced us in this one was that we didn't want a full-blown liquidation because the value of this company was really based on its expertise and the development to date.

"If you broke it up, it really would have been pretty worthless the investors would have gotten nothing back and the creditors would have gotten very little back.

"It was a satellite operation and it hadn't even put its satellites up yet,'' said David Cook, another lawyer on the case.

"To try and sell satellites in the process of being manufactured would have made ICO 's break up value very low,'' he continued.

Ms Mayor said the team started off by trying to find a method by which they could ring fence the group, and prevent creditors and shareholders from "actually trying to do anything precipitous which would have resulted in the company having to go into a full blown winding up''.

"It was a very well coordinated campaign. We filed proceedings in Delaware in Chapter 11 federal court there, and filed proceedings in Bermuda and in Cayman all on the same day,'' she said.

The Chapter 11 order was granted and provisional liquidators appointed in Bermuda. What was unique was that in this case the liquidator allowed the directors of ICO to continue running the company so that they could work on its re-financing.

Typically, when companies are being wound up, the provisional liquidator plays an important role in taking powers away from the directors.

"We were adapting the formal traditional use of the winding up proceeding here to a more innovative way of re-organising a company and then allowing it to continue,'' said Ms Mayor.

"The net result is that we never actually went forward on the winding up petition either here or in the Cayman,'' she continued. "We just had this provisional liquidator which meant that no creditors could file proceedings here, without the leave of the court.'' And the cooperation of the court was integral to the project's success.

"The Court was fully on board with all this and that was one of the really exciting things about it,'' Ms Mayor said.

"The Chief Justice who had the conduct of the matter himself was very sensitive to the international aspect of it, to the cooperativeness of it to the fact that it was a very innovative way of using our existing procedures.

"There was a challenge in the middle of it and we had a hearing in the court which lasted a couple of days,'' she continued, "but he restated his belief that what we were doing was appropriate under the law, albeit slightly different and he dismissed the challenge.'' The directors of ICO found a new investor in Craig McCaw, who, by pouring $1.2 billion into the project, saved it from total collapse.

Counsel keeps ICO flying high The new route was also a time saver. It was completed in less than a year compared with normal liquidations which tend to drag on for several years. In addition to saving time, Michael Morrison, an accountant on the case, said the importance of the result, is that it shows that Bermuda companies have the opportunity to re-organise and re-structure as needed.

"In the US it is very common for a debt company to choose to restructure itself,'' he said.

"In Bermuda it's fairly common that they will need to re-structure or re-finance in some way during their life span particularly in some of the more new economy entities like telecommunications.''