Heron hits back at creditor: Group links objections to pounds 1.4bn restructuring with lawsuit

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The Independent Online
HERON, Gerald Ronson's troubled property and garages group, yesterday accused a creditor of trying to delay its pounds 1.4bn restructuring scheme as a tactic to fend off a lawsuit launched against him in New York.

A group of five companies led by Simon Shane, a Bermuda-based property developer owed dollars 42m, told the High Court that it had a number of 'serious and substantial' objections to the scheme of arrangement to rescue Heron.

There was not enough information for general creditors and there were problems under US law because the scheme involved the issue of unregistered securities.

But Heron said it had filed a case against Mr Shane and one of his companies for alleged breach of duties and obligations, fraud and negligent misrepresentation, and in the case of Mr Shane for conversion of property.

A spokesman added: 'Mr Shane has a vested interest in attempting to interfere with Heron's restructuring, thus forcing Heron into formal insolvency proceedings which would be detrimental to creditors as a whole.'

The court gave the objectors, First Eastern Developments, Stratagem Development Corporation and three other creditors including a bondholder, until today to present an affidavit with the details.

Richards Butler, solicitors for the protesters, said there would be other objections beyond those referred to at the hearing.

Heron will have a further week to respond and the dispute is due to return to court in the week beginning 26 July.

This could undermine Heron's hopes of gaining court approval for its financial restructuring by the end of this month.

Even if the objection is dismissed approval for the scheme could slip into August.

The objections come at a sensitive time. Heron has already won approval for the scheme from all its banks and bondholders after lengthy negotiations. All that remains for the scheme to go ahead is approval by the courts in the three jurisdictions involved.