Icopal AS & Ors, Re

The companies applied for orders to convene meetings of creditors to consider schemes of arrangement under section 899 of the Companies Act 2006. The court's task at the convening stage is to determine jurisdictional questions and identify appropriate classes for voting, not to determine the merits of the proposed schemes.

The judge was satisfied for present purposes that the companies were liable to be wound up under the Insolvency Act 1986 and that an English law jurisdiction clause provided a sufficient connection with the English forum, having regard to authorities such as Re Rodenstock and Re Primacom and Article 44 of the Council Regulation. Challenges as to likely foreign enforceability (notably in the United States and France) were raised but, lacking cogent evidence from the dissenting creditors, were reserved for the sanction hearing.

On class composition, the court applied the established test (as explained in Re Hawk Insurance and earlier authorities): the relevant inquiry is similarity or dissimilarity of legal rights, not private interests. The judge concluded that it was not presently inappropriate to treat the lenders as a single class for convening purposes; any challenge to class constitution could be reconsidered at the sanction hearing.

Accordingly the applications to convene were granted and directions were given for notices, advertisement, appointment of a chairman and confidentiality under CPR 5.4D(2).

The applications concerned four companies seeking orders to convene creditor meetings to consider schemes of arrangement under section 899 of the Companies Act 2006. The schemes formed part of a group restructuring intended to stabilise the group and enable refinancing by 2016; the companies said that without the schemes insolvency proceedings were a real risk.

Parties and posture:

• The companies applied to convene meetings. A large majority of scheme creditors supported the proposals and had given lock-up agreements. Two lenders, Svenska Handelsbanken AB and HSH Nordbanken AG, were opposed and raised specific objections.

Issues framed by the court:

1. Whether the English court had jurisdiction to sanction the schemes and whether the companies had a sufficient connection with England for the purpose of Companies Act 2006 section 895(2)(b) and sanction under section 899;
2. Whether the proposed single class of scheme creditors for each company was correctly constituted, applying the test as explained in Re Hawk Insurance and related authorities.

Material facts and contentions:

• The dissenting lenders argued the schemes might not be recognised or enforceable in the companies' home jurisdictions (notably the United States for a Delaware-incorporated company and France for RFG Holding (France) SAS), and that the lenders should not be treated as a single class because the facilities had deliberately differentiated rights (maturities, margins, tenors).
• The companies relied on evidence and legal opinion from Danish, French and US experts that the schemes would be recognised; the dissenting creditors had not produced expert evidence on the specific provisions relied upon by them.

Court's reasoning:

• At the convening stage the court must address jurisdiction and class composition but should not attempt to determine the substantive merits or fairness of proposed compromises; those matters are for the sanction hearing.
• The judge concluded that, for present purposes, the companies were liable to be wound up and that the English law jurisdiction clause supplied a sufficient connecting factor — drawing on Re Rodenstock, Re Primacom and Article 44 of the Council Regulation. Nevertheless, specific enforceability concerns raised by the dissenting creditors ought to be addressed with cogent evidence and were therefore reserved for the sanction hearing.
• On classes, the court applied the legal-rights test: differences of private interest are not a ground for separate classes; the question is whether legal rights are so dissimilar that creditors cannot sensibly consult together. The judge was not persuaded that separate meetings were necessary at the convening stage and allowed the convening orders, reserving full consideration to the sanction hearing.

Result sought: Orders to convene creditor meetings and directions for advertisement, notice, chairman and confidentiality. The court made those orders and granted the requested confidentiality order under CPR 5.4D(2).

The court granted the companies' applications to convene scheme meetings. The rationale was that (i) for convening purposes the companies were liable to be wound up under the Insolvency Act 1986 and an English law jurisdiction clause provided a sufficient connection to the forum; (ii) issues as to foreign enforceability and detailed challenges to jurisdiction or class composition lacked cogent evidential support from the dissenting creditors and should be determined at the sanction hearing; and (iii) on the composition of classes the legal-rights test did not at this stage require separate meetings and the court would, if necessary, reconsider classes at sanction.