Shoosmiths Secures First Indemnity Costs Order in Madagascar Oil Restructuring

Shoosmiths and South Square advised Madagascar Oil in its restructuring proceedings, acting for the Plan Company in relation to the sanction and subsequent costs ruling. The matter concerned the Restructuring Plan for Madagascar Oil, which was sanctioned in August 2025. Following that sanction, the court has now issued a novel indemnity costs order against an opposing creditor for conduct described as frivolous and vexatious. The ruling requires the challenging creditor to pay a significant proportion of the Plan Company’s costs on an indemnity basis and refuses to order the Plan Company to meet the challenger’s costs. The decision is described as precedent-setting: it signals that UK courts will penalise unfocused or meritless challenges to Restructuring Plans and will manage creditor conduct by using costs awards where appropriate. The outcome is expected to influence creditor and adviser behaviour in future restructuring proceedings. The ruling rebuts a common approach of broad, speculative challenges and sets a baseline for costs awards against creditors who offer no assistance to the court. As Restructuring Plans are often met by speculative objections, the judgment is an exceptional marker of how courts intend to control proceedings and deter unreasonable challenges. Shoosmiths represented Madagascar Oil with a team composed by: Lee Sennett (Partner, Corporate Restructuring and Advisory), Hayley Çapani (Legal Director), Lucy Sanderson (Senior Associate) and Yasmin King (Associate). South Square represented Madagascar Oil with a team composed by: Matthew Abraham and Rabin Kok.

Shoosmiths Secures First Indemnity Costs Order in Madagascar Oil Restructuring

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