Tele Columbus AG, Re
[2024] EWHC 181 (Ch)
Plusholding GmbH, Re
17 November 2023
[2023] EWHC 2915 (Ch)
High Court
A German company asked a UK court to let its creditors vote on a rescue plan. Some creditors got extra perks in the deal, but the judge said this didn't stop them from agreeing or disagreeing as a group. The court allowed the vote to go ahead.
Key Facts
- •PlusHolding GmbH (the "Company") applied to convene a single meeting of creditors to approve a scheme of arrangement under Part 26 of the Companies Act 2006.
- •The Company is a German holding company with a subsidiary, PlusServer GmbH, operating in data and IT infrastructure services.
- •The Group faces financial difficulties with €264,684,680 outstanding under Term Facilities due in August 2024.
- •A restructuring plan involves transferring Group ownership to creditors, reinstating debt, and a new €15,000,000 facility.
- •35 out of 36 creditors (91.2% of liabilities) signed a lock-up agreement; one remains.
- •The scheme addresses limitations of CLO vehicles that cannot approve restructuring under the Senior Facilities Agreement.
Legal Principles
A class of creditors 'must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest'
Sovereign Life Assurance v Dodd [1892] 2 QB 573 at 583 (Bowen LJ)
A lock-up agreement does not automatically fracture a class of creditors.
Re Telewest Communications plc (No.1) [2020] EWHC 924 (Ch) at [53]
Backstop fees and original issue discounts do not fracture a class if they reflect commercial risk and are offered to all.
Re Pizza Express Financing 2 Ltd [2020] EWHC 2873 (Ch) at [42]
Payment of Ad Hoc Committee's fees does not fracture the class if it only defers expenses incurred in restructuring.
Re Codere Finance 2 (UK) Ltd [2021] 2 BCLC 396 at [68]-[69] and [101]-[104]
Mutual releases of liability do not fracture the class even with varying circumstances among creditors.
Governance benefits (nomination rights) do not fracture the class if the interests of all creditors are aligned.
Section 895(1)(a) CA 2006: Requires a compromise or arrangement between a company and its creditors (or members) or any class of them.
Companies Act 2006
Section 895(2)(b) CA 2006: The word “company” includes a foreign company.
Companies Act 2006
Sufficient connection with England and Wales is needed for the court to exercise its statutory power in international cases. This is considered at the sanction hearing.
Outcomes
The court granted an order convening a single meeting of Scheme Creditors.
The court found that the Scheme Creditors formed a single class, despite some potential contrary indicators, and that sufficient notice had been given.