Seat Pagine Gialle Spa, Re

A foreign company may fall within section 895 of the Companies Act 2006 even where, because of the EC Insolvency Regulation, it cannot presently be wound up in England. The relevant question is whether it is a company liable to be wound up within the statutory meaning.

A sufficient connection with England may arise from English-law liabilities. An exclusive English jurisdiction clause may also support jurisdiction under Article 23 of the Judgments Regulation. Creditors receiving lock-up or consent fees do not automatically form a separate class. The issue is highly fact-specific and turns on matters including availability of the benefit to all creditors, its size and its likely effect on voting.

Seat Pagine Gialle SPA, an Italian holding company facing financial difficulties, sought directions for meetings of three creditor classes to consider a scheme of arrangement forming part of a wider restructuring. The relevant liabilities were governed by English law and the finance documentation contained an exclusive English jurisdiction clause.

The company had its centre of main interests in Italy and no establishment in the United Kingdom. The court therefore considered whether it was a company within section 895 of the Companies Act 2006, whether there was a sufficient connection with England, whether the Judgments Regulation deprived the court of jurisdiction, and whether creditors offered lock-up or consent fees should constitute a separate class.

1. Jurisdiction under section 895. The company was a company for the purposes of section 895 of the Companies Act 2006. The expression covers a foreign company and is not confined to an English or other United Kingdom company. The fact that the company could not presently be wound up in England, because of the allocation of jurisdiction under the EC Insolvency Regulation, did not alter that conclusion. Following Re Drax Holdings Ltd, [2004] 1 WLR 1049, Re DAP Holdings NV, [2006] BCC 48, and Re Rodenstock GmbH, [2011] BusLR 1245, the court was not satisfied that the relevant reasoning was wrong.
2. Sufficient connection. There was a sufficient connection with England because the liabilities affected by the scheme were governed by English law.
3. Judgments Regulation. The court did not decide whether Article 2 applied. It held, following Re Primacom Holding GmbH, [2011] EWHC 3746 (Ch), that Article 23 did not deprive the English court of jurisdiction. The fact that the lenders could waive the exclusive jurisdiction clause did not prevent Article 23 from applying.
4. Creditor classes and lock-up benefits. A benefit offered in return for an agreement to vote in favour of a scheme does not, by itself, require the consenting creditors to form a separate class. The question is highly fact-specific. Relevant considerations included that the offer was available to all scheme creditors, that the fee was relatively small, and that there was no evidence that creditors with substantial commercial objections would be swayed by it. The approach was consistent with Re Primacom Holding GmbH, [2011] EWHC 3746 (Ch), Re DX Holdings Ltd, [2010] EWHC 1513 Ch, and Re Telewest Communications plc, [2004] BCC 356.
5. If the lock-up arrangement were shown to have a serious impact on voting, the issue could be raised at the sanction hearing. The court could then consider whether the classes were wrongly constituted or whether its discretion should be exercised against sanction.
6. The meetings were convened and the relevant documents approved for distribution.