Re APCOA Parking (UK) Ltd

The court considered an application under Part 26 of the Companies Act 2006 to convene nine scheme meetings to approve schemes of arrangement extending the termination date under a group facilities agreement. The judge's role was limited to a preliminary assessment of (i) whether the proposed creditor classes were appropriately constituted and (ii) whether there were any obvious jurisdictional impediments to the court entertaining and giving effect to such schemes.

The court applied the established class test (as summarised with reference to Re T&N No 3 and related authorities) and concluded that proposed classes of lenders could sensibly consult together because their legal rights, both before and after the schemes, were not so dissimilar as to make joint meetings impracticable. The court also addressed cross-border jurisdictional issues arising from a creditor vote to change the governing law and forum to English law and the English courts, and, on the basis of expert foreign-law opinions, found no obvious reason at the preliminary stage to treat that change as ineffective or to decline to permit the Part 26 process to proceed.

Accordingly the court approved the convening of the scheme meetings, while emphasising that these conclusions were preliminary and that substantive challenges (including recognition and enforceability abroad or the ultimate validity of the contract changes) remain for the sanctions hearing.

Background and parties: The applicants were nine Scheme Companies within a European car-park operator group. Each was a borrower under a multi-jurisdictional facilities agreement containing Priority Senior Facilities and Second Lien Facilities that were due to terminate on 25 April 2014. The Scheme Companies sought to convene scheme meetings under Part 26 Companies Act 2006 to extend the termination date to avoid likely insolvency consequences.

Nature of the application: An application for orders to convene meetings of creditors to consider and, if thought fit, approve schemes of arrangement under Part 26, and for related directions about those meetings.

Issues framed by the court:

• whether the proposed classes of creditors were properly constituted so that creditors with sufficiently similar legal rights could consult together (applying the comparator of liquidation as relevant);
• whether there were any jurisdictional impediments to the English court exercising its Part 26 powers, including (a) the validity under the original governing law of creditor-approved changes of governing law and jurisdiction to English law and English courts, and (b) whether any English order would be recognised and given effect in the foreign jurisdictions in which the Scheme Companies are resident.

Court's reasoning and conclusions: The court explained that at this stage its task is preliminary and confined to identifying any clear obstacles to convening meetings. Applying the established tests on class composition, and having regard to the comparator of insolvency, the court concluded that the proposed classes of lenders could sensibly consult together and therefore approved the class meetings. On the international law points, the applicants produced expert opinions from the relevant foreign systems indicating that the creditor-led changes to governing law and jurisdiction were valid under the original laws; the judge was satisfied that there was no obvious reason to treat the alterations as ineffective and that sufficient connections existed for the English court to intervene, subject to full consideration at the sanction stage. The court therefore granted the application to convene the meetings but recorded that substantive objections and detailed challenges remained open to be addressed at the sanctions hearing.

Application to convene scheme meetings under Part 26 of the Companies Act 2006 granted. The court approved the proposed class constitution as appropriate on the preliminary test and, on the basis of expert opinion and existing authorities, found no obvious jurisdictional impediment to proceeding, while reserving all substantive issues for the sanction hearing.