Consort Healthcare (Tameside) Plc, Re
[2024] EWHC 1438 (Ch)
In the matter of the Great Annual Savings Company Limited
17 February 2023
[2023] EWHC 1026 (Ch)
High Court
A company wanted to restructure its debts. The judge checked if the plan was fair to all creditors, especially those with uncertain claims. After some changes, the judge said the plan was okay and allowed the company to hold meetings with its creditors to vote on it.
Key Facts
- •Great Annual Savings Co Ltd ('the Company') proposed a restructuring plan under s.901C of the Companies Act 2006.
- •The plan involved 15 classes of creditors, including a secured creditor, HMRC, energy suppliers, other creditors, and contingent creditors.
- •The Company initially sought relief under s.901C(4) to exclude certain creditors deemed to have no genuine economic interest, but later withdrew this request.
- •The court considered whether the plan satisfied the jurisdictional requirements of s.901A, particularly the 'give and take' requirement for a compromise or arrangement.
- •A key issue was the treatment of contingent creditors, initially offered a nominal £1, later revised to a 2p in the £ dividend from a £14,000 fund.
- •The court approved the convening of class meetings for all 15 creditor classes.
Legal Principles
A compromise or arrangement requires 'give and take' – a mere surrender or expropriation of rights without compensating advantage is insufficient.
Re NFU Development Trust Ltd [1972] 1 WLR 1548
The phrase 'compromise or arrangement' in s.901A is construed similarly to its Part 26 meaning.
Re Gategroup Guarantee Ltd [2021] EWHC 304 (Ch), Re Virgin Atlantic Airways Ltd [2020] EWHC 2191 (Ch), Re Pizza Express Financing 2 plc [2020] EWHC 2873 (Ch)
Section 901G allows sanctioning a plan binding on dissenting creditors if they are no worse off than in the relevant alternative.
Re Smile Telecom Holdings Ltd [2022] EWHC 740 (Ch)
The court considers creditors' existing rights and compares them to rights under the plan to determine class composition.
Companies Act 2006, s.901
Identifying creditors for a compromise is initially a matter for the company, but it must act reasonably.
Companies Act 2006, s.901
Outcomes
The court approved the convening of separate class meetings for all 15 classes of creditors.
The court found that the Company had taken reasonable steps to notify creditors and that the proposed classes reflected the differing rights and interests of the creditors.
The court held that the revised treatment of contingent creditors satisfied the 'give and take' requirement for a compromise or arrangement.
The establishment of a £14,000 fund for a small dividend to contingent creditors provided sufficient compensating advantage.
The court found that conditions A and B of s.901A were met.
The Company faced significant financial difficulties and the plan aimed to mitigate these difficulties by providing a better outcome for creditors than administration.