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A group of Ardagh bondholders holding CDS protection have retained Milbank as a legal advisor to go through the Irish packaging firm’s debt documentation and evaluate credit event triggers, according to 9fin sources.

“My understanding is that they are aligned in terms of ensuring an appropriate outcome is reached for the CDS,” said one buysider.

The appointment comes at a time when the EMEA Credit Derivatives Determinations Committee (DC) has accepted two general interest questions to determine whether Ardagh’s restructuring deal has triggered a ‘restructuring’ event and a ‘bankruptcy’ event under Ardagh Packaging Finance PLC’s CDS.

The DC struck down another general interest question asking the committee to determine whether there had been a bankruptcy event last week. At that time, the DC observed that “the Reference Entity had not made a general assignment, arrangement, scheme or composition with or for the benefit of its creditors generally and such an assignment, arrangement, scheme or composition had not become effective”.

Ardagh launched a support agreement for its restructuring deal, which would equitise around $4.3bn of junior SUN and PIK debt while also issuing $1.5bn of new 1L debt with around $300m paying off existing shareholders, at the end of July. Bondholders were eligible for early bird consent fees until 12 August.

On 13 August, Ardagh confirmed that holders representing 99% of its SSN and SUN debt have signed up to the transaction, while holders representing around 82% of its PIK debt had signed. This would allow the firm to implement a consensual deal for its SSN and SUN holders, while using a Part 26 Scheme of Arrangement to effect a restructuring of its PIK debt.

A group of PIK holders opposed to the deal — of an undisclosed size — have appointed White & Case as legal advisors, as reported.

What remains unclear is whether a Scheme that just affects ARD Finance, the issuer of the PIK notes, would also cause a credit event for Ardagh Packaging Finance PLC — the CDS reference entity — due to cross-defaults.

The two recent general interest CDS questions were submitted following an earlier accession update released by Ardagh on Friday, where the firm confirmed it had enough support to implement its restructuring deal. Market participants believe that the accession updates and early bird deadline could be triggers for a credit event.

So far the DC has met twice, on 12 August and 13 August, to deliberate the bankruptcy and restructuring questions but has yet to come to a decision for either one.

Milbank previously advised the SUNs and PIKs crossholder group before it migrated over to Akin Gump in May last year, as 9fin reported at the time.

Milbank did not respond to a request for comment.