Project Lietzenburger Strasse HoldCo SARL, Re
[2023] EWHC 2849 (Ch)
Ambatovy Minerals Société Anonyme & Anor, Re
3 September 2024
[2024] EWHC 2598 (Ch)
High Court
Two companies are deeply in debt and want to restructure. A group of lenders objects. The judge allowed the companies to hold meetings with creditors to discuss the plan, but some important questions will be decided later.
Key Facts
- •Ambatovy Minerals Société Anonyme and Dynatec Madagascar Société Anonyme (Plan Companies) sought permission to convene creditor meetings for restructuring plans under Part 26A of the Companies Act 2006.
- •The Plan Companies operate a nickel and cobalt mine in Madagascar with approximately US$2.3bn debt.
- •The plan involves new funding and discharge of ‘out-of-the-money’ debt.
- •Senior and Recovery Financing lenders opposed the plan, raising concerns about the relevant alternative, creditor treatment, and the Super Senior debt priority.
- •The Plan proposes two creditor classes: Super Senior lenders and other lenders.
- •The court considered notice adequacy, jurisdictional conditions, class composition, and potential roadblocks.
Legal Principles
Class composition under Part 26A requires that a class comprises creditors with sufficiently similar rights to consult together with a view to their common interest.
In Re AGPS Bondco plc [2024] EWCA Civ 24 and In Re AGPS Bondco (at [109]-[114])
At the convening stage, the court focuses on jurisdictional roadblocks, not the merits of the plan.
Re Noble Group Limited [2018] EWHC 3092 (Ch) (at [76]) and Re Virgin Atlantic Airways Limited [2020] EWHC 2191 (Ch) (at [35])
Adequate notice to creditors must allow them to raise class and jurisdictional issues, not to challenge the plan's merits.
Various authorities mentioned in section 31.
For a company to be eligible for a restructuring plan under Part 26A, it must be a company within the meaning of section 901A(1) of the Companies Act 2006 and meet conditions A and B under section 901A(2) and (3).
Companies Act 2006, section 901A; Re Project Lietzenburger Strasse Holdco [2023] EWHC 2849 (Ch) (at 56)
Creditors who receive the same return in the relevant alternative should receive the same return under a restructuring plan unless different treatment is justified.
In Re AGPS Bondco plc [2024] EWCA Civ 24
Outcomes
Permission granted to convene creditor meetings.
The court found adequate notice was given, jurisdictional conditions were met, and the proposed class composition was appropriate for the convening stage, though subject to potential revisiting at the sanction hearing. No obvious roadblocks to sanction were identified.
Sanction hearing scheduled for 25 November 2024 for five days.
The court acknowledged the urgency and the parties' cooperation in scheduling the hearing.
Class composition issue to be potentially revisited at sanction hearing.
The court acknowledged the complexities of determining the relevant alternative and returns in that alternative prior to the convening hearing, and agreed to the parties' pragmatic approach to address this at a later stage.