Plusholding GmbH, Re
[2023] EWHC 2915 (Ch)
Tele Columbus AG, Re
1 February 2024
[2024] EWHC 181 (Ch)
High Court
A German company with debts under English law wanted to rearrange its finances using a UK court process. The judge checked if everyone was properly notified, if it was fair to group all the creditors together for the vote, and if the UK court had the power to deal with it. The judge agreed to allow the process to continue because the debts were under English law and everyone involved seemed happy with the plan.
Key Facts
- •Tele Columbus AG (the Company), a German public company with no UK presence, sought a scheme of arrangement under Part 26 of the Companies Act 2006.
- •The scheme involves extending the maturity of €650 million senior secured notes and a €1.38 billion senior facilities agreement, along with amendments to the terms.
- •Kublai GmbH, the majority shareholder (ultimately owned by Morgan Stanley and United Internet), will contribute €300 million in equity.
- •The Company faces short-term liquidity challenges and longer-term commercial challenges due to regulatory changes and expiring contracts.
- •Over 90% of scheme creditors acceded to a lock-up agreement, providing early support for the scheme.
- •The scheme proposes a single class of creditors, despite some differences in the economic terms of the notes and facilities agreement.
Legal Principles
At the convening hearing, the court does not assess the merits or fairness of the scheme; its function is limited to class composition and jurisdictional roadblocks.
Re Telewest Communications plc (No.1) [2004] BCC 342 at [14], Re Noble Group Limited [2019] BCC 349, Re Indah Kiat International Finance Co BV [2016] BCC 418
A class of creditors must comprise those whose rights are not so dissimilar as to prevent them from consulting together for their common interest.
Sovereign Life Assurance v Dodd [1892] 2 QB 573, Re Hawk Insurance Company Limited [2001] 2 BCLC 480, Re UDL Holdings Ltd [2002] 1 HKC 172, Re Apcoa Parking Holdings GmBH [2015] BCC 142
The court's jurisdiction to approve a scheme is broad, extending to foreign companies, but must not be exercised contrary to international comity. A 'sufficient connection' is required.
In re Drax Holdings Ltd [2004] 1 WLR 1049, Re Apcoa Parking Holdings GmbH [2015] BCC 142
The court will not sanction a scheme if it is likely to be ineffective due to lack of international recognition.
Re Smile Telecoms Holdings Limited [2021] EWHC 685 (Ch), Re All Scheme Ltd [2022] EWHC 1318 (Ch), Re DTEK Energy BV [2022] 1 BCLC 260
Outcomes
The court granted the convening order, allowing a single meeting of creditors.
The court found that sufficient notice was given, a single class of creditors was appropriate, the explanatory statement was adequate, and there was no apparent jurisdictional roadblock.