Court of Appeal Rules Against Unfair Treatment of Creditors in AGPS BondCo PLC Restructuring Plan

Citation: [2024] EWCA Civ 24
Judgment on


In the recent judgment of Strategic Value Capital Solutions Master Fund LP & Ors v AGPS BondCo PLC: EWCA-Civil 2024, the Court of Appeal (Civil Division) grappled with several critical legal principles underpinning restructuring plans pursuant to Part 26A of the Companies Act 2006. The case revolved around whether the Plan in question fairly treated all series of Noteholders and upheld the principle of pari passu distribution. Crucially, the Court also examined the cross-class cram down powers under the Act, employing both horizontal and vertical comparisons as analytical tools.

Key Facts

The AGPS BondCo PLC faced financial difficulties and proposed a restructuring plan to manage its roughly €6.1 billion debt, which included senior unsecured notes (SUNs). However, the proposed Plan, sanctioned by the lower court, did not receive the requisite majority support from the 2029 Noteholders, triggering an appeal. The Plan’s controversial aspects included sequential payment dates for different SUNs and priority terms for the 2024 Notes under the Transaction Security. There was also a provision allowing the existing shareholders of the Group’s Parent Company to retain a significant proportion of their equity.

At the heart of the appeal were the following legal principles:

  1. Pari Passu Principle: This principle signifies equal treatment of creditors in insolvency, dictating that losses should be shared proportionately.

  2. Cross-Class Cram Down: Under Part 26A, Condition A (the ‘no worse off’ test) requires that a dissenting creditor class under a Plan must be no worse off than they would be in the event of liquidation.

  3. Legal Authority to Compromise or Arrange: The concept of a “compromise or arrangement” under Part 26A, drawing from Part 26, suggests a structure requiring some give-and-take, as opposed to a confiscation or expropriation without a compensatory advantage.

  4. Horizontal and Vertical Comparisons: These comparisons assess whether the Plan is fair in relation to other creditor classes and the treatment of creditors in the alternative scenario, respectively.

The Court’s analysis applied these principles to determine whether the Plan’s sequential payment schedule and preferential treatment of certain Note classes were justified and fair in light of the pari passu principle and the relevant alternative being insolvency.


The Court of Appeal set aside the lower court’s order sanctioning the Plan. It held that the Plan unjustifiably departed from the pari passu principle by imposing greater risk on the 2029 Noteholders. It also concluded that the rationality test from Telewest was inapplicable because the majority support from the voting classes could not override the dissenting class’s objection. The Court refused to allow the Plan, which could lead to unequal distribution among similarly situated creditors without proper justification or a relevant commercial reason supporting such a departure. Moreover, the Court rejected the argument that out-of-the-money shareholders or creditors could have their rights expropriated without compensation under Part 26A.


This case reaffirms the commitment of the courts to ensure fairness in the distribution of a company’s assets during restructuring, even in the face of innovative new statutory provisions like Part 26A’s cross-class cram down. The Court of Appeal’s decision underscores the importance of properly constructed creditor classes and the rejection of an overly simplistic application of the majority vote’s rationality in a cross-class cram down context. Importantly, it clarifies that differential treatment among creditors, violating the pari passu principle, requires a sound commercial justification proportionate to the benefits provided to the restructuring as a whole. The judgment provides a rigorous analytical framework for evaluating such restructuring plans in the future, reinforcing the principles of equitable creditor treatment and the safeguards against unfounded alterations to creditor rights.

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