Primacom Holding GmbH & Anor v A Group of the Senior Lenders & Credit Agricole

The court may sanction a scheme of arrangement for a foreign company where it has jurisdiction under Companies Act 2006. A scheme is not necessarily a dispute requiring the ordinary domicile rule in article 2 of the Judgment Regulation. Alternatively, contractual exclusive jurisdiction clauses and submission to the English court may satisfy articles 23 and 24. The court’s function is supervisory. It must assess class constitution, statutory compliance, explanatory material and whether an ordinary business person could reasonably approve the scheme, but it does not make the commercial decision for creditors.

Primacom Holding GmbH, a German company, applied under Part 26 of the Companies Act 2006 for sanction of a modified scheme of arrangement affecting senior lenders and other creditors. Four creditor meetings approved the scheme by substantial majorities, and no creditor opposed sanction.

The principal issue was whether the English court had jurisdiction to sanction a scheme for a company incorporated outside England and Wales, particularly where the affected creditors were not predominantly domiciled in the United Kingdom. The issue arose in light of the reasoning in Rodenstock GmbH, [2011] EWHC 1104 Chy.

1. Scheme approval. The statutory requirements for the four class meetings had been satisfied. The classes remained appropriate, the explanatory material was accurate and sufficient, and the scheme was one which an ordinary business person in the position of the creditors could reasonably approve. The court’s role was not to make the commercial decision, but to ensure that there was no blot or feature undermining the informed approval of the substantial creditor majorities.
2. Jurisdiction. The fact that the scheme company was incorporated in Germany did not prevent sanction by the English court. The court reaffirmed its earlier conclusion that it had jurisdiction under Part 26.
3. Judgment Regulation. The court provisionally considered that a scheme of arrangement was outside the purview of article 2 of Council Regulation (EC) No 44/2001 because no person was being sued and scheme creditors were not defendants in the intended sense. Even if article 2 applied, articles 23 and 24 provided alternative bases for jurisdiction. The loan agreements and umbrella agreement were governed by English law and contained exclusive English jurisdiction clauses. In addition, creditors had submitted to the English court by participating substantively in the earlier jurisdictional proceedings.
4. The possible analogy with article 4, identified in Rodenstock GmbH, was not required to resolve the issue. Any possible difference of view by the German courts concerning recognition or enforcement did not provide a sufficient reason to refuse sanction, given the reasonable prospect that the order would be recognised in Germany.
5. The final scheme and proposed order were approved.

This was a first-instance scheme-sanction application. The judgment records an earlier hearing at which four creditor meetings were convened, followed by the present hearing to sanction the modified scheme.