Apcoa Parking (UK) Ltd & Ors, Re

At the convening stage of a scheme of arrangement, the court makes only a preliminary assessment of class constitution and jurisdiction. Creditors belong in one class where their legal rights are sufficiently similar to permit consultation with a view to their common interest. The comparison includes their rights without the scheme, using the correct alternative outcome, and the rights conferred by the scheme.

A foreign company capable of being wound up in England falls within Part 26 of the Companies Act 2006. A valid change to English governing law and exclusive English jurisdiction may provide a sufficient connection, even where made shortly before the scheme. The court must also be satisfied provisionally that its order is likely to receive effect in relevant foreign jurisdictions.

Nine companies in a European parking group applied for orders convening creditor meetings under Part 26 of the Companies Act 2006. Their substantial secured facilities were due to mature shortly, but the companies expected to be unable to repay them. Each proposed scheme would extend the maturity date while a wider restructuring was negotiated.

Seven applicants were incorporated outside England and had their centres of main interests elsewhere. The facilities had originally been governed by foreign laws and subject to foreign jurisdiction. Creditor majorities had recently changed the governing law to English law and selected the English court exclusively, although unanimity required to extend maturity had not been achieved.

The court considered whether the proposed creditor classes were appropriate and whether any apparent defect concerning the amendments, the foreign applicants, sufficient connection or overseas recognition made the schemes incapable of eventual sanction.

1. The application was granted. The proposed class meetings were approved and the schemes were permitted to proceed towards creditor consideration and any subsequent sanction hearing.

2. The convening hearing involved a preliminary assessment only. Following Re Hawk Insurance Company Ltd [2001] 2 BCLC 480, the court considered class constitution and apparent jurisdictional obstacles at this stage. It could not bind the court at the sanction hearing. Creditors retained the ability to raise jurisdictional objections later, particularly given the short notice and the novelty of the issues.

3. Creditors whose rights are so dissimilar that they cannot sensibly consult together with a view to their common interest require separate meetings. The comparison concerns legal rights against the company, rather than private interests. It includes rights without the scheme, assessed against the correct alternative outcome, and new rights under the scheme.

   The appropriate comparator was an insolvency process, particularly a likely German insolvency process for the holding company. Against that comparator, the priority senior and second lien lenders had sufficiently similar rights. The limited schemes extended maturity in materially the same way and provided equivalent pro-rata consent fees. The proposed classes were therefore appropriate on the available information.

4. The validity of the changes to governing law and jurisdiction depended upon the laws governing the facilities before amendment. Expert evidence from each relevant legal system disclosed no obvious reason why the amendments were ineffective. The creditors had also been informed that the changes might facilitate an English statutory scheme. There was consequently no present reason to refuse intervention under Part 26.

5. Under section 895(2) of the Companies Act 2006, a company for Part 26 purposes includes a foreign company liable to be wound up in England under the Insolvency Act 1986. Foreign incorporation and a foreign centre of main interests therefore did not preclude jurisdiction.

6. Assuming the amendments were valid, English governing law and exclusive English jurisdiction supplied a sufficient connection with England. Expert evidence also indicated that courts in Germany, Belgium, Denmark, Norway and Austria would give effect to a sanctioned scheme. These conclusions remained open to challenge at the sanction hearing.

not stated in the judgment.