The Support Club acknowledges the broad opposition demonstrated amongst unsecured creditors by the holders of Class 8 claims, Class 7 claims and Class 7bis claims to Orpea's accelerated safeguard plan and notes the voting process to be an additional irregularity that renders the whole plan unlawful. It is clear that no jurisdiction can now approve this plan and must consider all the irregularities that have taken place since the beginning, when a lawful approach could have been chosen instead.
While it was anticipated that the affected parties wouldn't support the plan, it should be noted that, following the decision of the Court of Versailles of 22 June 2023, the voting process was not compliant with the French Commercial Code. The Support Club continues to believe the current restructuring plan arbitrarily favors and enriches the French State's investment vehicle, Caisse des dépôts et consignations (the CDC), the Steering Committee and certain (primarily French) creditors.
In accordance with the ruling of the Court of Appeal of Versailles on 22 June 2023, the Administrators were ordered to classify the parties that held both unsecured and secured claims in a separate class. In not identifying these claims, the vote took place in violation of the decision of the Court of Appeal of Versailles. Hence, the plan cannot be approved in its current form. The Support Club also believes this detrimental restructuring process could severely curtail any future provision of international capital to other projects under the auspices of French law.
The Support Club has also sent a letter directly to the Judicial Administrators, who have failed to call a new vote and consistently refused to engage with the Support Club, with other stakeholders, and to consider an alternative proposal by Concert'O.
Despite the Support Club's entreaties to the Administrator and Orpea, the Support Club regret's Orpea's decision to request a cross class cram down, serving the interests of the CDC and a group of French banks, some of which benefited from the first and second conciliations by having part of their unsecured claims effectively elevated to the detriment of all other unsecured creditors. This would force all creditors to give economics in Orpea to the CDC at a significant undervaluation (and take a large haircut) and without the benefit of a competitive tender process. This should not be sanctioned without the consent of all classes and the group argues that it would breach at least two French laws and would, in effect, be tantamount to a stealth nationalization.
The Support Club says: "The broad opposition to this plan amongst unsecured creditors has been compellingly demonstrated, and we regret that the Administrators have chosen to organise the vote in an unlawful manner.This is yet another example of the Administrators' disregard for the law and shows that the whole process is compromised. This does not permit any jurisdiction to approve the plan.
"The restructuring process has already cost the French taxpayer in excess of €100m in advisory costs alone,1 whilst a number of undisclosed French banks have had their unsecured claims to the tune of €600M repaid at par during the second conciliation process, in a flagrant breach of the principle of equitable treatment of all unsecured creditors. This development is even more concerning for unsecured creditors invested in France, with the Orpea restructuring process continuing to set a terrible precedent. We worry that this precedent will increase the cost of debt capital for all French borrowers and lead to other negative outcomes for future distressed unsecured claims. We note that some other distressed unsecured claims in France have plummeted in value since the recent developments in Orpea.
"The result is that this bungled restructuring proposal has been rejected by the Support Club and a significant amount of unsecured creditors who have followed due law and process."
"We will continue to pursue all legal avenues to properly enforce creditor rights."
About Support Club
The Support Club is a group of funds managed by Fortress Investment Group, Kite Lake Capital, Kyma Capital, LMR Partners and Whitebox Advisors who are unsecured creditors of Orpea SA (a French healthcare provider), representing €497m of Orpea's unsecured claims and managing over $62 billion in AUM.
1 Orpea's 2022 full-year results Q1 2023 revenues (page 6), published 12 May 2023 https://www.orpea-group.com/wp-content/uploads/2023/05/PR_ORPEA_FYR-2022_Q1-2023slides_EN.pdf
View source version on businesswire.com: https://www.businesswire.com/news/home/20230629146954/en/
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