Metinvest BV, Re

The applicant, Metinvest BV, applied under Part 26 of the Companies Act 2006 for an order convening a meeting of creditors to consider a proposed scheme of arrangement which would extend a previously sanctioned moratorium. The court considered notification, the identity of scheme creditors, the composition of classes, and jurisdictional points under the recast Brussels Regulation. The court approved enfranchising beneficial owners of notes (and excluding double voting by trustees/common depositaries), accepted that the three series of noteholders should be treated as a single class, and was satisfied that there were sufficient English jurisdictional links to permit the convening order. For those reasons the court ordered the convening of a single creditors' meeting in the terms of the draft order.

Background and parties: Metinvest BV, a Netherlands incorporated finance company for a major Ukrainian mining and steel group, entered into restructuring negotiations after financial difficulties. An earlier scheme providing a moratorium was sanctioned on 29 January 2016 and lasted until 27 May 2016. The present application sought an order under Part 26 of the Companies Act 2006 to convene a meeting of holders of three series of notes (maturing in 2016, 2017 and 2018) to approve a further scheme providing a moratorium to 30 September 2016 (with possible extension to 30 November 2016).

Nature of the application: An application for an order convening a creditors' meeting to consider and approve a scheme of arrangement under Part 26, to enfranchise beneficial owners of notes and to decide class composition and related procedural matters.

Issues framed:

• Whether notification to interested parties was adequate;
• Who should be entitled to vote (beneficial owners v. trustees/common depositaries) and how to avoid double counting;
• Whether the various noteholders should form a single class or multiple classes;
• Whether the English court had jurisdiction to convene the meeting given limited UK-domiciled creditors and the recast Brussels Regulation;
• Practical matters of notice, timing and conduct of the meeting.

Court’s reasoning and decision: The judge accepted the manner and timing of notification used by the company. Enfranchisement of beneficial holders and the exclusion of trustees and common depositaries from voting to avoid double counting was regarded as appropriate. On class composition, the court followed the approach taken at the earlier convening hearing and concluded there was no relevant distinction between the series of noteholders and that they should be treated as a single class; thus a single meeting of the three series was appropriate. On jurisdiction, the court considered that the presence of some UK-domiciled beneficial owners together with the fact that the notes were governed by English law provided a sufficient basis to exercise jurisdiction. Practical arrangements for notice and conduct of the meeting were also acceptable. The court therefore made the order in the terms of the draft convening a single creditors' meeting.

Other material points: The proposed scheme did not include certain facility liabilities known as the PXF Facilities, which it was anticipated would be dealt with consensually. The judgment notes prior judicial consideration of the earlier scheme on 13 January and the sanction on 29 January 2016.

The court ordered the convening of a single creditors' meeting of the three series of noteholders to consider the proposed scheme of arrangement. The order was made because notice procedures were adequate, enfranchising beneficial owners (excluding trustees and common depositaries) avoided double counting, there was no relevant distinction between the series of noteholders so a single class was appropriate, and there were sufficient English law and jurisdictional links to permit the convening order.