Revolution Bars Limited, Re
[2024] EWHC 2949 (Ch)
Chaptre Finance PLC, Re
14 November 2024
[2024] EWHC 2908 (Ch)
High Court
A company needed money to avoid bankruptcy. It proposed a plan to restructure its debts, but some creditors disagreed. A judge reviewed the plan and decided if those disagreeing creditors would be worse off than if the company just went bankrupt. The judge decided they wouldn't be worse off and approved the plan, allowing the company to get the money it needed to stay afloat.
Key Facts
- •Chaptre Finance plc (Plan Company) sought sanction for a restructuring plan under Part 26A of the Companies Act 2006.
- •The Plan aimed to raise £85 million in new super senior financing to address a liquidity crisis.
- •The plan was approved by over 75% of the Priority, Elevated, and Hedging Creditors, but only 23.9% of the Senior Creditors.
- •The Senior Creditors, including K-Sure (a contingent creditor), opposed the plan.
- •The Plan involved amendments to finance documents and the release of certain liabilities.
- •The relevant alternative was considered to be the administration of the Plan Company and MGT.
- •The main dispute centered on whether the “no worse off” test under section 901G(3) of the Companies Act 2006 was satisfied.
Legal Principles
Section 901G of the Companies Act 2006 allows the court to sanction a restructuring plan despite dissent from a class of creditors if certain conditions are met, including the ‘no worse off’ test.
Companies Act 2006, Section 901G
In determining whether to sanction a plan against a dissenting class, the court considers whether the dissenting class is ‘in the money’ or ‘out of the money’ in the relevant alternative. The court will scrutinize the fairness of the plan’s distribution of benefits more closely if the dissenting creditors would receive something in the relevant alternative.
Re AGPS Bondco plc [2024] EWCA Civ 24; UK Commercial Property Finance Holdings Limited v Cine-UK Ltd [2024] EWHC 2475 (Ch)
Expert evidence in restructuring plan proceedings should comply with CPR Part 35, including identifying the authors and their expertise and confirming an overriding duty to the court.
CPR Part 35; Smile Telecoms Holdings Ltd [2022] EWHC 740 (Ch)
A party seeking to challenge expert evidence usually must cross-examine the expert witness; exceptions exist for obvious errors or lack of reasoning.
TUI UK Ltd v Griffiths [2023] UKSC 48; Smile Telecoms Holdings Ltd [2022] EWHC 740 (Ch)
Outcomes
The court sanctioned the restructuring plan.
The court found that the Plan Company satisfied the ‘no worse off’ test, even considering challenges to the expert evidence. The dissenting creditors (Senior Creditors) were deemed ‘out of the money’ in the relevant alternative (administration), minimizing the weight of their objections. The court also found that the amendments to the ICA, while challenged, were not inherently unfair given the context of the overall plan and the need for new funding.