Re Noble Group Limited

The court considered an application under Part 26 of the Companies Act 2006 to sanction a scheme of arrangement proposed as part of a cross-border restructuring. The judge applied the established Buckley test (as explained in Telewest) in four stages: statutory compliance, fair representation of the class and absence of coercion, whether the scheme is one which an intelligent and honest member of the class might reasonably approve, and whether there is any legal or practical blot on the scheme. Key issues decided included class composition, the scope and permissibility of third-party releases, the fairness of risk-participation arrangements that offer different consideration to participating creditors, the substantial fee payments to some creditors, the robustness of the independent claims-adjudication procedure, and whether the company had a sufficient connection with England for the court to exercise its scheme jurisdiction and whether the scheme was likely to have substantial international effect. The judge concluded that the statutory requirements were met and that it was appropriate to sanction the scheme.

This was a sanction hearing for a scheme of arrangement proposed by Noble Group Limited (the "Company") as part of a broader Restructuring under Part 26 Companies Act 2006. The Company, a Bermuda-incorporated ultimate holding company listed in Singapore, proposed transferring substantially all of its assets to a newly incorporated New Noble Group and issuing new debt and equity instruments to Scheme Creditors. The principal parties included the Company and members of an Ad Hoc Group of Scheme Creditors; Deutsche Bank and other finance creditors were significant participants.

The application followed an earlier convening judgment ([2018] EWHC 2911 (Ch)) and the holding of two class meetings. The principal relief sought was sanction of the Scheme, which would release Scheme Claims in return for specified consideration and enable the New Noble Group to obtain new trade finance and hedging facilities, with an option for creditors to become Participating Creditors (risk participation) in return for superior consideration.

The Court identified and addressed a set of discrete issues:

• Whether the statutory formalities and class composition were correct and whether creditors had adequate notice and an adequate explanatory statement;
• Whether the majority at the meetings fairly represented the class and were not motivated by collateral interests (in particular in relation to substantial fees and Backstop Fees);
• Whether the scheme was one that an intelligent and honest creditor could reasonably approve, including review of the risk participation mechanism and the claims adjudication process;
• Whether the releases of claims against third parties were within the court's Part 26 jurisdiction and whether any "blot" or illegality arose; and
• International matters: whether the Company had a sufficient connection to England and whether the Scheme would have substantial international effect, including the possible operation of Article 8(1) of the Recast Judgments Regulation.

On these issues the judge: found there had been substantial compliance with the convening order and adequate disclosure; accepted that the classes were properly constituted; concluded there was no evidential basis to treat payments of fees or Backstop Fees as rendering the majority improperly motivated; held that the risk-participation mechanism and the independent adjudication procedure were fair and appropriate; accepted that releases of claims closely connected to the Scheme and to its negotiation and implementation were within Part 26 jurisdiction; and concluded the Company had demonstrated a sufficient connection to England and that the Scheme was likely to be effective in other relevant jurisdictions. The court therefore sanctioned the Scheme.

The court sanctioned the Scheme. The judge held that the statutory requirements of Part 26 were satisfied, the Buckley test was met on all four stages (statutory compliance; fair representation and bona fide voting by the majority; fairness of the scheme such that an intelligent and honest creditor might reasonably approve it; and absence of any legal or practical blot), and that it was appropriate in all the circumstances, including international recognition considerations and the court's discretion, to exercise jurisdiction and sanction the arrangement.