Apcoa Parking Holdings GmbH & Ors (Rev 1)

This is an application to sanction nine schemes of arrangement under Part 26 of the Companies Act 2006, limited in scope to dealing with an imminent termination date under the group facilities which, if not extended, would likely precipitate insolvency proceedings in Germany. The court applied the usual tests for sanction: (i) compliance with statutory requirements, (ii) proper constitution and fair representation of classes, (iii) absence of coercion of minorities and (iv) that the arrangement is one an informed member of the class might reasonably approve (the Re Hawk / 'man of business' test). The court found the classes properly constituted, meetings properly conducted with strong majorities and no opposition, no conflicting interests, and no 'blot' on the schemes. The court also addressed cross-border jurisdictional issues arising from late change-of-law and exclusive-jurisdiction provisions in the facilities agreements: having considered expert evidence from the relevant jurisdictions and authorities such as Re Drax and Re Rodenstock, and having considered the Judgments Regulation and Insolvency Regulation issues, the court concluded there was sufficient connection and likely recognition abroad to warrant exercising jurisdiction. Accordingly the court sanctioned each scheme.

The applicants sought sanction of nine schemes of arrangement under Part 26 of the Companies Act 2006 to effect a narrow modification of termination dates under group facilities, thereby obtaining time for a consensual reconstruction and avoiding imminent insolvency of the German parent and its group. On 26 March 2014 the court had earlier heard applications for directions to convene scheme meetings and gave directions (see the ex tempore judgment [2014] EWHC 997 (Ch)).

The principal issues before the court were:

• whether the class meetings had been properly conducted and the classes properly constituted;
• whether any conflicting interest or other procedural defect emerged which would undermine the fairness of the process;
• whether there was any opposition or other 'blot' on the schemes that should prevent sanction;
• whether the court had, and should exercise, jurisdiction in the cross-border context given that English law and jurisdiction had been adopted late pursuant to change-of-law clauses in the facilities agreements; and
• whether orders made here would be effective or recognised in the other relevant jurisdictions, including issues arising under the Judgments Regulation and the Insolvency Regulation.

The court summarised and applied the established test for sanction (as stated in Re Hawk and earlier authorities): it will ensure statutory compliance, fair representation of the class, bona fide majority action not coercing minorities and that the arrangement is one an intelligent and honest member of the class might reasonably approve. The court observed that the meetings produced very high turnout and overwhelming affirmative votes, with no votes against and only some abstentions from one lender. Counsel confirmed no conflicting interests. Expert evidence was adduced about the validity and effectiveness of the change of governing law and jurisdiction in each relevant foreign law; the experts did not identify any jurisdiction where the change would be ineffective and, in varying degrees, each confirmed likely recognition.

On the Judgments Regulation point the court noted a residual conundrum about Article 2 but concluded that, even if Article 2 applied, exceptions such as Articles 23 and 24 (exclusive jurisdiction and submission) and the expert evidence meant there was no basis to decline sanction. The court also addressed whether the scheme unfairly deprived creditors of an essential part of their bargain (a requirement for unanimous consent to alter termination dates) and concluded that the change‑of‑law clause and expert evidence meant the unanimous consent provision did not preclude the proposed schemes. For these reasons the court sanctioned each of the nine schemes.

This was a first instance application and the court sanctioned each of the nine schemes of arrangement under Part 26 of the Companies Act 2006. The court concluded that the statutory requirements were satisfied, classes were properly constituted and fairly represented, there was no coercion or other 'blot' on the schemes, and that, despite the cross-border character and the late change to English law and jurisdiction, there were sufficient connections and expert assurances of recognition abroad to justify exercise of jurisdiction and sanctioning of the schemes.

There was an earlier interlocutory hearing on 26 March 2014 concerning convening the scheme meetings and directions; see the ex tempore judgment [2014] EWHC 997 (Ch). No appellate history is otherwise described in the judgment.