What MyTravel means for bondholders

In the restructuring of MyTravel, completed at the end of 2004, bondholders challenged the company's right to pursue a scheme of arrangement without their agreement. The MyTravel restructuring presented the difficulties that arise when competing interests have to be balanced in a complex restructuring involving numerous creditor groups. In this case, the usual problems were compounded by the contraints of a regulated business. This had two important implications: time was limited, with an absolute cut-off after which the regulator was expected to act; and the consequence if the regulator did act would would be an immediate and irremediable loss of value for all creditors. The process was therefore shorter than would normally be the case for a restructuring of this complexity - less than three months from the first formal proposal to creditors to completion. The other notable result was that the borrower resorted to a court process to bring bondholders reluctantly to accept the allocation of equity initially proposed....