VTB Capital Plc (in administration), Re
[2024] EWHC 1777 (Ch)
In the matter of Petropavlovsk Plc (in administration) & Ors
20 January 2023
[2023] EWHC 264 (Ch)
High Court
Three companies needed to pay off their debts quickly. They proposed a plan to do so, and almost everyone agreed. The judge approved the plan, even though there were some questions about international rules and sanctions. The plan makes sure everyone gets all their money back.
Key Facts
- •Applications for sanction of schemes of arrangement under Part 26 of the Companies Act 2006 for Petropavlovsk PLC (in administration) and two subsidiaries.
- •Schemes aim to pay all external creditors in full due to urgency caused by Citibank closing accounts and difficulties in obtaining alternative banking arrangements.
- •No opposition to the schemes at the sanction hearing, although an anonymous email raised concerns about sanctions and Gazprombank's involvement (Gazprombank is no longer a creditor).
- •Scheme meetings held on 11 January 2023; resolutions passed with overwhelming support (over 90% in number and value for PLC, unanimous for subsidiaries).
- •Minor technical modifications made to the schemes before and after the meetings, primarily clarifying definitions and improving claim processing procedures.
- •Amendments made to allow more time for submission of outstanding claims and to clarify the valuation of future claims.
Legal Principles
Test for sanctioning a compromise or arrangement: compliance with statutory requirements; fair representation of the class; reasonableness of the scheme; absence of 'blot' or defect; international effectiveness.
Re Telewest Communications PLC [2004] EWHC 924 (Ch); Re KCA Deutag UK Finance PLC [2020] EWHC 2977 (Ch)
Statutory compliance includes proper class constitution, compliance with the convening order (including adequate explanatory statement), and obtaining statutory majorities.
Re Nostrum Oil & Gas PLC [2022] EWHC 2249 (Ch)
Where class composition is considered at the convening hearing, the court at the sanction hearing should adopt earlier conclusions.
Re Global Garden Products Italy SpA [2017] BCC 637 (Ch)
Sufficient connection with England for sanctioning a scheme: for English incorporated companies, no further connection needed; for foreign companies, liabilities compromised must be governed by English law.
Re Drax Holdings Ltd [2003] EWHC 2743 (Ch); Re Dundee Pikco Ltd [2020] EWHC 89 (Ch); Re Vietnam Shipbuilding Industry Group [2014] BCC 433
International effectiveness of a scheme: English law governed debt inherently likely to be recognized abroad; strong creditor support provides evidence of substantial effect.
Re DTEK Energy BV [2022] 1 BCLC 260; Magyar Telecom BV [2014] BCC 448; Re Public Joint-Stock Commercial Bank Privatbank [2015] EWHC 3299 (Ch)
Consideration of sanctions regime (Russia (Sanctions) (EU Exit) Regulations 2019) and their potential impact on the schemes.
Regulation 18C of the Russia (Sanctions) (EU Exit) Regulations 2019
Outcomes
Sanction granted to all three schemes.
Compliance with statutory requirements; fair representation and bona fide actions of creditors; reasonableness of the scheme (creditors to be paid in full); no blots or defects identified; schemes likely to be recognised internationally; sanctions issues adequately addressed.