Revolution Bars Limited, Re
[2024] EWHC 2949 (Ch)
Project Verona Limited, Re
4 June 2024
[2024] EWHC 2080 (Ch)
High Court
A company wanted the court to approve its plan to fix its debts. Even though few creditors voted, the court said yes because no one objected and the plan was better than letting the company go bankrupt. The judge made sure the deal was fair to everyone involved.
Key Facts
- •Project Verona Limited applied for court sanction of a plan under Part 26A of the Companies Act 2006.
- •The plan was approved by the Secured Creditor and some landlord classes but not others due to low turnout.
- •Sanction was sought on the basis of 'cram down' under s901G of CA 2006 for dissenting creditor classes.
- •The relevant alternative, if the plan failed, was determined to be a pre-pack administration with the sale of Category A sites.
- •Low turnout at creditor meetings was attributed to apathy, not procedural failings.
- •No creditors objected to the plan at the sanction hearing.
Legal Principles
Court's power to sanction a plan under Part 26A of the Companies Act 2006, including the 'cram down' power under s901G.
Companies Act 2006
Definition of the 'relevant alternative' under s901G(4) of CA 2006 as the most likely outcome if the plan is not sanctioned.
Companies Act 2006
Condition A of s901G: No dissenting creditor should be worse off under the sanctioned plan than in the relevant alternative.
Companies Act 2006
Condition B of s901G: The secured creditor, if they would receive payment in the relevant alternative, must vote in favour of the plan.
Companies Act 2006
In determining the relevant alternative, the court considers the directors' evidence as to what is likely to occur, but this evidence is not accepted uncritically.
Re E D & F Man Holdings Limited [2022] EWHC 687 (Ch)
Fair distribution of restructuring benefits requires horizontal (comparison between classes) and vertical (comparison between a class's position under the plan and the relevant alternative) analysis; consideration of benefits to non-plan stakeholders is also relevant.
Re AGPS Bondco plc [2024] EWCA Civ 24
Low turnout at creditor meetings does not automatically invalidate a plan if it is due to apathy and not procedural defects.
Re All Scheme Limited [2021] EWHC 1401 (Ch)
A single creditor's attendance does not constitute a meeting for the purposes of plan approval.
Re Altitude Scaffolding [2006] BCC 904
Objections to a Part 26A plan must be actively pursued, not merely stated passively.
Re Smile Telecoms Holdings Ltd [2022] Bus. L.R. 591
Outcomes
The court sanctioned the restructuring plan.
The statutory requirements for sanction were met, including Conditions A and B of s901G. The court found no unfairness in the distribution of benefits, no jurisdictional issues, and no valid objections raised by creditors.