Atento UK Limited & Anor, Re
[2023] EWHC 2754 (Ch)
In The Matter Of Hilding Anders International AB
21 June 2023
[2023] EWHC 1513 (Ch)
High Court
Two companies are trying to avoid bankruptcy. They need their lenders to agree to a plan that will give them more money and change some debts into company shares. A judge said the lenders are similar enough to agree to this plan, and allowed a meeting to discuss it.
Key Facts
- •Application for a Convening Order by Hilding Anders International AB (HAI) and Anders Lux Holdings S.à r.l. (Lux Holdco), two companies in the "Hilding Europe and Asia Group"
- •HAI is party to a Senior Facilities Agreement (SFA) with lenders, involving a €300 million Term Loan.
- •A 2022 restructuring resulted in €270 million of lending commitments being exchanged for notes issued by Lux Holdco under a Notes Purchase Agreement (NPA).
- •The Notes and Term Loan are contractually stapled, meaning the creditors are the same but with different rights under SFA/Term Loan and NPA.
- •The Group faced liquidity issues, leading to negotiations with an ad hoc group of Scheme Creditors (AHG).
- •A Lock-Up Agreement was executed, granting forbearance on an interest payment and outlining a new restructuring.
- •A €20 million New Money Facility was established, with all SFA Scheme Creditors having the right to participate.
- •The proposed Schemes aim to avoid insolvent liquidation by elevating the New Money Facility, implementing a debt-for-equity swap for the Notes, and amending the SFA.
- •The alternative to the Schemes is likely insolvent liquidation, with estimated recoveries of 12.6% to 25% for SFA creditors and nothing for NPA creditors.
- •Approximately 90% of Scheme Creditors (by value) have acceded to the Lock-Up Agreement.
Legal Principles
Scheme jurisdiction under Part 26 Companies Act is exercisable where a compromise or arrangement is proposed between a company and its creditors.
Companies Act 2006, s.895(1)
There must be a "sufficient connection" with England to justify exercising the jurisdiction.
Re Drax Holdings [2004] 1 WLR
A class must be confined to those whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest.
Sovereign Life Assurance v Dodd [1892] 2 QB 573
Outcomes
Convening Order granted for meetings of SFA Scheme Creditors and NPA Scheme Creditors.
The court found sufficient notice was given, jurisdiction exists due to the English governing law of the SFA and NPA, and class composition is justified.
Proposed class composition of SFA Scheme Creditors and NPA Scheme Creditors is justified.
Despite features like the AHG, Lock-Up Agreement, and New Money Facility, the court determined that the creditors' rights are not so dissimilar as to prevent them from consulting together in their common interest.