Re NN2 NewCo Ltd

The court considered applications for directions to convene scheme meetings under section 895 of the Companies Act 2006 in respect of NN2 Newco Limited and Politus BV. It held that the English court had jurisdiction over NN2 (an English company) and over Politus (a Dutch company) because a sufficient connecting factor was established through governing law and jurisdiction clauses in the relevant finance documents and by the incorporation of NN2 as an intermediate issuer. The judge addressed EU jurisdictional issues (the Recast Judgments Regulation and Article 25) and concluded that asymmetric English jurisdiction clauses of the type in the documents are capable of founding jurisdiction.

The court also determined that the proposed class compositions were appropriate: NN2 creditors should be convened in two classes (holders of the 2019 Notes and holders of the 2024/Existing Bonds) and the Politus Lenders in a single class. The judge found that arrangements such as lock-up agreements, consent fees, work fees and ad hoc group fees did not fracture classes because they were disclosed, commercially justified and did not prevent meaningful consultation among class members.

Finally, the court directed the convening of scheme meetings for both the NN2 and Politus schemes, reserving final determinations (including recognition abroad and sanction) for the sanction hearing.

The Nyrstar Group faced acute liquidity pressure in late 2018 and early 2019. To implement a recapitalisation and restructuring, NN2 Newco Limited was incorporated as an intermediate holding company and various debt instruments (the 2019 Notes, the 2024 Notes and Existing Bonds) and a separate Politus facility were to be restructured. The proposed NN2 scheme would release liabilities under the Existing Notes and Existing Bonds and substitute new instruments to be issued by Trafigura; the Politus scheme would reinstate and reduce the Politus Lenders' claims and offer participation in "New Money".

Nature of the application: directions to convene creditor meetings for two schemes of arrangement (an NN2 scheme and a Politus scheme) ahead of a later sanction hearing.

Issues before the court:

• Jurisdiction: whether the English court could exercise scheme jurisdiction over NN2 and over Politus (s.895 CA 2006 and Part V Insolvency Act 1986), including whether governing law and asymmetric jurisdiction clauses engaged the Recast Judgments Regulation (EU 1215/2012) and Article 25.
• Whether class composition proposals were appropriate and whether various commercial arrangements (lock-up agreements, ad hoc fees, consent fees and work fees) fractured classes.
• Whether an order sanctioning any future scheme was likely to be efficacious in other jurisdictions or face "roadblocks" in recognition.

Reasoning and conclusions:

• Jurisdiction: NN2 (an English company) was plainly within s.895. Politus, although Dutch, was sufficiently connected to England because the Politus Facility was governed by English law and contained an asymmetric English jurisdiction clause; the judge accepted authority that such asymmetric clauses bind both parties in complementary ways (the borrower must sue in England; the lender may also sue elsewhere). Article 25 was held capable of applying and an application for a scheme was treated as a "dispute" for these purposes.
• EU rules: the court adopted the conventional approach that the Recast Judgments Regulation can be read to apply to schemes via Article 25; Article 8 (multiple defendants) need not be resolved in this case because sufficient English-domiciled creditors existed in relation to NN2 but not to Politus.
• Class composition: the court applied established principles (impossibility of consultation threshold) and accepted two creditor classes for NN2 (noteholders and bondholders) and a single class for Politus. Issues such as minimum denominations and trustee/ trust arrangements for fractional entitlements did not fracture classes.
• Commercial arrangements: 'ad hoc' fees, consent fees and coordinating-committee work fees were disclosed, modest and commercially justifiable; they did not materially affect whether classes could consult or whether the court should convene meetings.
• Recognition/efficacy: the judge observed there was no obvious obstacle to recognition (including a contemplated Chapter 15 filing in the United States and expert Dutch law evidence for Politus) but left final efficacy and recognition to the sanction hearing.

Outcome at this stage: direction was given to convene scheme meetings for both NN2 and Politus; final sanction and cross-border recognition issues remained to be addressed at the sanction hearing.

The court directed the convening of scheme meetings for both NN2 Newco Limited and Politus BV. It held that the English court had jurisdiction under s.895 CA 2006 (and Part V Insolvency Act 1986 principles) over NN2 and a sufficient connection to exercise jurisdiction over Politus via English governing law and asymmetric jurisdiction clauses; that asymmetric clauses of the type in the documents can give rise to Article 25 jurisdiction; and that the proposed class compositions and the existence of lock-up, consent and work fees did not fracture classes. The court reserved final determinations (including recognition and sanction) for the sanction hearing.