Azevedo and another v Imcopa Importacao, Exportaacao E Industria De Oleos Ltda and others [2012] EWHC 1849 (Comm)


The High Court has confirmed the legality of consent payments to noteholders. The court held that the offer of a consent payment in exchange for noteholder votes to amend the terms and conditions of the note are valid and legal providing that: the offer of the payment is openly disclosed to all noteholders before the relevant vote takes place; the payment is payable on an equal basis to all noteholders voting in favour of the proposed amendments; and all noteholders are free to vote.


In 2008, the Imcopa group prepared a restructuring plan to service its existing debt obligations and develop its business. The process of implementing this restructure gave rise to four proposals, made between May 2009 and October 2010. The proposals were put to noteholders in the form of consent solicitations. In conjunction with three of the four consent solicitations, it was openly proposed in documentation sent to all noteholders that a "consent payment" would be made to all those noteholders voting in favour of the extraordinary resolutions.

Two of the noteholders (the "Claimants") voted in favour of the first three proposals and received consent payments accordingly. They voted against the fourth consent solicitation and did not receive a consent payment.  Nevertheless, each of the extraordinary resolutions was passed approving the consent solicitations and the financial restructuring was completed successfully.

The Claimants issued proceedings in 2011 seeking a declaration that the extraordinary resolutions in respect of the last of the three consent solicitations were illegal and a declaration that the defendants refund the purchase price of the notes ($1.2 million).


The court had to decide whether the offer of a consent payment to noteholders if they voted in a particular way is illegal and amounts to a bribe. If such payments are in the nature of a bribe, the vote and the extraordinary resolutions would be invalidated.


Reviewing both domestic authorities and case law from Delaware, the court held that payments offered in exchange for votes did not constitute bribery in circumstances when they had been openly and repeatedly disclosed and explained in documents made available to all noteholders before the relevant noteholder meeting and vote took place. Further, the consent payments had been payable on an equal basis to all those noteholders voting in favour of the relevant consent solicitation and each noteholder had been entitled and free to vote in favour or against the consent solicitation.

The court was also persuaded by the fact that the Claimants had themselves benefitted from the payments in relation to some of the proposals. The Claimants were therefore effectively acknowledging that the payments were lawful.


This decision provides welcome clarification that the market practice of payment of consent fees only to noteholders who vote in favour of a scheme to amend the terms of their securities is permissible. It is important that in any such scheme, the offer of the payment is made openly and to all noteholders on the same terms.