Swissport Fuelling Ltd, Re The Companies Act 2006

The company applied for the court's sanction under section 899 of the Companies Act 2006 of a scheme of arrangement to permit amendments to the Credit Agreement and Intercreditor Agreement so as to enable a proposed "New Money Facility" to be given super‑senior ranking. The court applied the familiar three‑fold Buckley test (as explained in Re Telewest Communications plc (No. 2)): (1) statutory requirements complied with; (2) the class was fairly represented and the majority acted bona fide; and (3) the scheme was one which an honest and intelligent creditor could reasonably approve. The court was satisfied the convening order, notice and meeting procedures were properly followed, that a single class was appropriate, and that the virtual meeting had been conducted effectively. The scheme was overwhelmingly approved at the meeting (157 creditors, €893,200,000, 81.87% by value of the class voting, with no votes against). The court accepted expert evidence and submissions addressing international recognition (notably recognition under Chapter 15 in the United States, the Recast Judgments Regulation for Luxembourg and the Lugano Convention for Switzerland) and concluded the Scheme was likely to be effective in key foreign jurisdictions. A limited set of post‑convening modifications (relating to Swissport Cargo Services LP acceding as a Relevant Obligor) fell within the Scheme's power to be varied under clause 7.5 and were approved. The court therefore sanctioned the Scheme under section 899.

Background and parties

• The Company is Swissport Fuelling Ltd, a guarantor within the Swissport Group, which faced a severe liquidity crisis as a result of the Covid‑19 pandemic and sought new funding to continue trading.
• The scheme was designed to bind lenders under the Credit Agreement so as to permit amendments to the Credit Agreement and Intercreditor Agreement required to obtain a New Money Facility on a super‑senior basis.

Nature of the application

The application was for sanction of a scheme of arrangement pursuant to section 899 of the Companies Act 2006. A convening hearing was held on 5 June 2020 (convening judgment [2020] EWHC 1499 (Ch)) and a single remote creditors' meeting took place on 19 June 2020.

Issues framed

1. Whether the statutory requirements for convening and voting under s.895 and s.899 had been complied with.
2. Whether the creditors' meeting fairly represented the class and the majority acted bona fide.
3. Whether the Scheme was one which a creditor could reasonably approve.
4. Whether the court had jurisdiction and whether the Scheme would be effective in key foreign jurisdictions (international recognition issues including Chapter 15 (US), the Recast Judgments Regulation (EU) and the Lugano Convention (Switzerland)).
5. Whether proposed post‑convening modifications (notably addition of SCS as a Relevant Obligor) were permissible under clause 7.5 of the Scheme.

Evidence and reasoning

• The court reviewed the convening process and the Chairman's report of the remote meeting and was satisfied that notification and the conduct of the webinar had not impeded participation; the vote was 100% in favour by those voting, with turnout 81.87% by value and 72.35% by number.
• The court applied the three‑limb test from Buckley (as explained in Re Telewest (No. 2)), finding statutory compliance, fair representation and bona fides, and that no honest and intelligent creditor could reasonably refuse the Scheme in the circumstances. The likely alternative was an uncoordinated multi‑jurisdictional insolvency with materially worse recoveries.
• On international recognition the court accepted expert evidence (notably Mr Daniel Glosband on likely recognition under Chapter 15 in the United States, Mme Laurence Jacques on recognition under the Recast Judgments Regulation in Luxembourg, and Professor Rodrigo Rodriguez on recognition in Switzerland) and concluded the Scheme was likely to be effective in the key jurisdictions identified.
• The proposed amendments to include Swissport Cargo Services LP were disclosed before the meeting, did not have a material adverse effect on Scheme Creditors and were within the scope of clause 7.5, and so were approved.

Relief granted

The court sanctioned the Scheme under section 899 of the Companies Act 2006.

The court sanctioned the scheme of arrangement under section 899 of the Companies Act 2006. The court concluded that the statutory requirements were complied with, the single creditor class was appropriately constituted and fairly represented, the majority acted bona fide, the scheme was one which creditors could reasonably approve given the prospect of a materially worse outcome in uncoordinated insolvency, the scheme was likely to be effective in key foreign jurisdictions, and the limited post‑convening modifications (including addition of Swissport Cargo Services LP as a Relevant Obligor) were properly within the Scheme's amendment clause and could be approved.

The judgment is at first instance. Procedural steps described in the judgment include a convening hearing and judgment dated 5 June 2020 ([2020] EWHC 1499 (Ch)), a single remote scheme meeting convened on 19 June 2020, and the sanction hearing on 24 June 2020.