Cimolai SpA & Anor, Re
[2023] EWHC 2193 (Ch)
In The Matter Of Cimolai SPA
14 July 2023
[2023] EWHC 1819 (Ch)
High Court
Two Italian companies want to restructure their debts. They're already doing this in Italy, but some big creditors in England aren't playing ball. The English court said it's okay to have a separate restructuring plan for the English creditors, but carefully sorted them into different groups based on their type of debt and how they're likely to vote, so that everyone gets a fair chance.
Key Facts
- •Cimolai SpA and Luigi Cimolai Holdings SpA (Plan Companies) applied for restructuring plan orders under section 901C of the Companies Act 2006.
- •Financial difficulties stemmed from foreign exchange derivative contracts with JB Drax Honore (DIFC) Ltd, mostly governed by English law.
- •Italian concordato preventivo proceedings were already underway, recognized by the English court.
- •The restructuring plans aim to mirror the concordato proposals but bind English law creditors who declined Italian jurisdiction.
- •The plans involve repayment of secured creditors, percentage payments to unsecured creditors, and equity instruments.
- •A key issue was the composition of creditor classes for the plan meetings, particularly concerning creditors with disputed claims under English law derivative contracts.
- •JB Drax, a major creditor with a disputed claim, argued insufficient notice and potential gerrymandering of classes.
Legal Principles
A company must be liable to be wound up under the Insolvency Act 1986 to be subject to a restructuring plan.
Companies Act 2006, section 901A(4)
Sufficient connection to England and Wales is required for the court to exercise jurisdiction.
Re Drax Holdings Ltd [2004] 1 WLR 1049
A creditor class must consist of persons whose rights are not so dissimilar as to prevent consultation towards common interest.
Re Hawk Insurance Company Ltd [2002] BCC 300
The court considers rights, not interests, when determining class composition, focusing on the potential comparator (e.g., liquidation).
Re Virgin Active Holdings [2021] EWHC 814 (Ch)
Explanatory statements must provide sufficient information for creditors to make informed decisions.
Companies Act 2006, implied
Outcomes
The court approved the convening of creditor meetings for the restructuring plans.
The court found sufficient connection to England due to English law debt and the plans' role in complementing the Italian concordato.
The court accepted the proposed class composition, with some adjustments to accommodate creditors with disputed claims.
The court determined that creditors with disputed claims under English law derivative contracts should be in separate classes from other creditors due to differing interests and the impact on litigation strategies.
The court deemed the notice given to creditors sufficient despite concerns raised by JB Drax.
The court considered the information provided and detailed comments from JB Drax's representatives sufficient for appropriate consideration.