A Bermuda Scheme As An Alternative To Chapter 11: Digicel Case Study

Faced with a US$7 billion level of funded indebtedness, the Digicel group concluded a comprehensive debt restructuring in June 2020 that left its shareholders intact. A key aspect of the restructuring plan was an innovative Bermuda scheme of arrangement that was used as an alternative to Chapter11 bankruptcy. Edward Rance, an associate at Conyers, reports.

Background

Digicel is a leading communications and entertainment provider in the Caribbean, Central America and Asia Pacific, operating across 31telecommunications markets. Despite solid fundamentals, the Digicel group was faced with significant reductions in voice revenues, due to an industry-wide trend of voice services being substituted by data usage by mobile subscribers. Growth in Digicel's data revenues proved insufficient to offset this decline, and because Digicel had historically relied on debt capital to fund investment, the industry shift arose at a time when the group was heavily indebted: the group