Plusholding GmbH, Re
[2023] EWHC 2915 (Ch)
Lecta Paper UK Limited, Re
2 November 2023
[2023] EWHC 2908 (Ch)
High Court
A company is trying to avoid bankruptcy by getting its creditors to agree to a new plan. A judge decided that all the creditors are similar enough to vote together on the plan, and that the English court has the power to make this decision.
Key Facts
- •Lecta Paper UK Limited (the Company) applied for an order convening a single meeting of creditors to approve a Scheme of Arrangement under Part 26 of the Companies Act 2006.
- •The Scheme relates to two series of Senior Secured Notes (Senior Notes) with an aggregate principal value of €255,225,550.
- •The Scheme's main purpose is to release the Senior Notes and issue new notes (New SSNs) maturing in September 2028.
- •If the Scheme fails, the Group faces insolvency proceedings, potentially yielding 71p-44p in the pound for creditors; the Scheme aims to restore the Group's financial health.
- •A lock-up agreement with consent fees (0.5% of principal) was reached with a substantial number of Noteholders.
- •A New Money Facility of €90 million, underwritten by the parent company's shareholders, is crucial to the Scheme's success.
- •The governing law of the Senior Notes was recently changed to English law.
Legal Principles
A class must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult with a view to their common interest.
Sovereign Live Assurance v Dodd [1892] 2 QB 573
Outcomes
The court directed a single class meeting of creditors.
Scheme Creditors have materially the same existing rights and will receive the same commercial deal under the Scheme. Differences in interest rates between the two series of notes and consent fees do not necessitate separate classes, especially considering the significantly better outcome under the Scheme compared to insolvency.
The court confirmed jurisdiction.
The Company is a company as defined in Part 26 of the Companies Act 2006. Enforcement issues across Europe will be addressed at the sanction hearing. The amendment to the Senior Notes to confirm English jurisdiction is acceptable.