The   (Vinashin), a Vietnamese government-owned company registered in Vietnam, has received a High Court sanction of an arrangement scheme with some of its creditors related to a US$600 million facility. These creditors earlier rejected the company's debt restructuring proposals.

Vinashin was the fifth-largest shipbuilder in the world in 2008 and had liabilities of more than US$4.5 billion at the start of its financial restructure. It entered into arrangements with other domestic and international creditors as part of its overall financial restructuring plan.

Vinashin came under severe pressure from some of its loan creditors, who brought proceedings in the UK for summary judgment. Having successfully applied for a stay of those proceedings, the scheme was ultimately approved by creditors at a meeting in Singapore on August 5 2013 and sanctioned by the High Court on September 4 2013. The Court held that it had jurisdiction to sanction the scheme even though Vinashin had no operations or assets in the UK because the loans were governed by English law and subject to the non-exclusive jurisdiction of the English courts.

John Marsden, managing partner of Vietnam and departmental managing partner, commercial at Mayer Brown JSM, who led the team advising in Vietnam, said: "This is a milestone for Vietnam's shipping industry as well as its debt market. It sets a precedent for any future restructuring route map and will have a far reaching positive impact on foreign investors' confidence in Vietnam."

Devi Shah, joint head of restructuring at Mayer Brown in London, said: "This is the first time that a court has used its discretion to stay proceedings at an early stage so that a scheme can be put forward and the first time that a Vietnamese company has made use of an English scheme of arrangement as a restructuring tool. This case is an excellent example of the flexibility of a scheme of arrangement to assist the restructuring of any company with sufficient connection to England, and of the English court's 'can do' approach when it comes to restructurings proposed for the benefit of a company's creditors as a whole."