Arvos BidCo Sarl, Re
[2024] EWHC 1016 (Ch)
Light SA, Re
28 October 2024
[2024] EWHC 2733 (Ch)
High Court
A Brazilian company asked a UK court to approve a debt restructuring plan. Most creditors agreed, and the court approved the plan, despite a few minor issues. The plan makes it easier to settle the company's debts internationally.
Key Facts
- •Light SA (Scheme Company), a Brazilian company, applied for sanctioning a scheme of arrangement under Part 26 of the Companies Act 2006.
- •The scheme involves restructuring Light SA's subsidiaries, Light Energia and Light SESA, which issued notes guaranteed by the Scheme Company.
- •The notes' governing law was changed from New York to English law to facilitate the scheme.
- •The scheme was approved by 99.4% of Scheme Creditors in Brazil and 99.44% by value at a UK meeting.
- •The restructuring includes raising new capital and exchanging existing notes for new securities.
- •Noteholders had three options: debt-for-equity swap, exchange for junior securities, or a default option.
- •The scheme aimed to release liabilities under the existing notes, enhancing international enforceability.
- •Some procedural irregularities (late delivery of documents) occurred, but the court waived these.
Legal Principles
Test for sanctioning a scheme of arrangement: compliance with statutory requirements, fair representation of the class, reasonable approval by an intelligent and honest man, absence of defects, and effectiveness in relevant jurisdictions.
KCA Deutag UK Finance plc [2020] EWHC 2977 (Ch) at [16]
A class must be confined to persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest.
Richards J convening judgment [2024] EWHC 2097 (Ch)
Court's jurisdiction to sanction schemes including third-party releases where necessary to give effect to the arrangement between the company and scheme creditors.
Re Noble Group Limited [2018] EWHC 3092 (Ch) at [24]
English law governing debt usually provides sufficient connection for scheme purposes, even if the law was changed for the scheme's purpose.
Vietnam Shipbuilding Industry Group [2013] EWHC 2476 (Ch); Re Tele Columbus AG [2024] EWHC 181 (Ch)
For international effectiveness, the scheme must achieve a substantial purpose in key jurisdictions; certainty is not required, but credible evidence that the court is not acting in vain must be provided.
Re DTEK Energy BV [2021] EWHC 1551 at [27]
Outcomes
The court sanctioned the scheme of arrangement.
The court found compliance with statutory requirements, fair representation of the class, reasonable approval by creditors, no significant defects, and sufficient international effectiveness. Minor procedural irregularities were waived.