Consort Healthcare (Tameside) Plc, Re
[2024] EWHC 1438 (Ch)
In the matter of Chaptre Finance Plc
15 June 2023
[2023] EWHC 1665 (Ch)
High Court
A company needs a big loan to avoid going bankrupt. They need their creditors to agree to a plan to get the loan, and a judge said it's okay to have a meeting to discuss the plan. The judge decided that even though some creditors are slightly different, it's fine for them to be in the same group to make the decision because bankruptcy would be worse for everyone.
Key Facts
- •Chaptre Finance plc (Plan Company) sought permission to convene creditor meetings for a restructuring plan under Part 26A of the Companies Act 2006.
- •The Plan Company is part of a group involved in constructing a biomass power plant facing delays and liquidity issues.
- •The plan involves an £80 million super senior loan facility to avoid insolvency.
- •The plan requires amendments to existing contractual arrangements with creditors.
- •A lock-up agreement secures support from a significant portion of stakeholders.
- •Three creditor classes are proposed: Funder Creditors, Hedging Bank Creditors, and Pellet Supplier.
- •The Pellet Supplier expressed concerns about the plan's impact on its rights.
- •The relevant alternative to the plan is considered to be insolvency proceedings.
- •An Alvarez & Marsal report assesses creditor recoveries under the plan and the alternative.
Legal Principles
Part 26A of the Companies Act 2006 governs restructuring plans.
Companies Act 2006
Section 901G of the 2006 Act defines the 'relevant alternative' as the most likely outcome if the plan is not sanctioned.
Companies Act 2006
A class of creditors must have sufficiently similar rights to consult together with a view to their common interest.
Case law (referenced but not explicitly named in the document)
The court's role at a convening hearing is not to assess the plan's merits but to determine jurisdictional matters and class composition.
Practice Statement of 26 June 2020
Outcomes
The court granted permission to convene three creditor meetings.
The court found sufficient notice had been given, jurisdictional conditions were met, and proposed classes were properly constituted.
The court accepted the proposed class composition.
Despite some differences in creditor rights, the court determined that these were not sufficiently dissimilar to prevent consultation on common interests, given the stark choice between the plan and insolvency.
The court approved the timetable for the meetings and sanction hearing.
The court deemed the timetable appropriate given the urgency of the situation.