Apcoa Parking Holdings GmbH & Ors (Rev 1)

When sanctioning a scheme of arrangement, the court must verify statutory compliance, proper class representation, bona fide voting without coercion, and whether the scheme is one which an intelligent and honest member of the class might reasonably approve. The court ordinarily gives substantial weight to the commercial judgment of a well-informed majority, but must refuse sanction where the class constitution is flawed, creditors were materially misled, or a blot or other unfairness appears.

In a cross-border scheme, English jurisdiction may be established by a valid change-of-law clause selecting English law and an exclusive English jurisdiction clause. The court must also be satisfied that the scheme is fair, effective under the relevant prior law, and likely to be recognised and given effect in jurisdictions where enforcement would otherwise be sought.

Nine companies applied for orders sanctioning schemes of arrangement under Part 26 of the Companies Act 2006. The schemes were intended to extend imminent facility termination dates and avert insolvency proceedings. Seven scheme companies were incorporated abroad and had their centres of main interests outside England.

The schemes had been approved at the directed meetings by substantial majorities, without opposition. The court therefore considered the conduct and results of the meetings, possible conflicts of interest, overall fairness and any jurisdictional impediment arising from the cross-border structure. The principal jurisdictional issue was whether English law and jurisdiction, introduced under a change-of-law clause, supplied a sufficient connection with England.

1. The court sanctioned all nine schemes. The meetings were properly constituted and conducted. The voting results were a strong endorsement, with no votes against and no creditor opposition. No conflicting interest or blot invalidating the schemes was identified.

2. In ordinary cases, the commercial judgment of a substantial majority of sophisticated and carefully advised creditors is an important indicator of business advisability. The court nevertheless retains an independent duty to examine statutory compliance, class representation, bona fide voting, absence of coercion, and whether the arrangement is one which an intelligent and honest member of the class might reasonably approve. The court will ordinarily defer to the meeting unless the class was improperly constituted or consulted, the meeting acted without regard to the class’s interests, creditors were materially misled, or a blot appears. The court applied the guidance in Re Hawk Insurance Company Ltd [2001] 2 BCLC 480, including the passage approved in Re National Bank Ltd [1966] 1 WLR 819.

3. The court had jurisdiction over the foreign scheme companies. The relevant inquiry included whether they could be wound up in England and whether the English connections made the exercise of jurisdiction neither exorbitant nor inappropriate. The analysis in Re Drax Holdings Ltd [2004] 1 WLR 1049, as adopted and developed in Re Rodenstock GmbH [2011] EWHC 1104 and subsequent cases, supported jurisdiction based on the English governing law and forum, even without a majority of creditors in England, where recognition and effectiveness abroad were sufficiently established.

4. The late selection of English law and jurisdiction under the change-of-law clause did not prevent sanction. Expert evidence supported the validity and effectiveness of the change under the original laws. The change-of-law provision qualified the creditors’ original bargain, including the requirement for unanimous consent to alter termination dates, so far as the change was properly explained, valid and effective.

5. Any possible application of Articles 2, 23 and 24 of the Judgments Regulation did not require refusal of sanction. The court did not resolve whether Article 2 applied, because the jurisdictional exceptions and the evidence that foreign courts would recognise the schemes were sufficient.