Swissport Fuelling Ltd, Re The Companies Act 2006

The court’s sanction of a scheme of arrangement involves a three-stage inquiry: compliance with the statutory requirements; fair representation of the relevant class and bona fide voting by the majority; and whether an honest and intelligent creditor could reasonably approve the scheme.

The court gives substantial weight to creditors’ commercial judgment, but does not simply rubber-stamp the meeting’s decision. A scheme need not be effective worldwide. The court should ordinarily be satisfied that it is likely to achieve its purpose in key foreign jurisdictions. Modifications may be approved at the sanction hearing where the scheme permits them and they could not reasonably be expected materially adversely to affect creditors’ rights or interests.

Swissport Fuelling Ltd applied under section 899 of the Companies Act 2006 for sanction of a scheme of arrangement. The scheme concerned lenders under the Group’s Credit Agreement and was intended principally to facilitate amendments allowing new money financing with super-senior ranking during the Covid-19 liquidity crisis.

The scheme was approved unanimously by the creditors present and voting, representing 81.87% of creditors by value. The issues were whether the statutory and class requirements were satisfied, whether the scheme was fair and reasonably approvable, whether it had sufficient international effectiveness, and whether proposed modifications could properly be approved.

1. Sanction test. The court applied the three-stage approach identified in Re Telewest Communications plc (No. 2) [2005] BCC 36: statutory compliance; fair representation and bona fide voting; and whether a creditor could reasonably approve the scheme.
2. The meeting had been properly convened and conducted. A single class was appropriate. The unanimous vote in favour, high turnout and absence of opposition established fair representation and bona fide conduct. The court gave significant weight to the creditors’ commercial judgment, while recognising that its function was not merely to register the vote.
3. The scheme was one which an honest and intelligent creditor could reasonably approve. The likely alternative was a complex, multi-jurisdictional insolvency producing materially worse recoveries, while approval was likely necessary to obtain new liquidity.
4. Jurisdiction and effectiveness. The court reaffirmed its conclusions on the scheme’s jurisdictional foundations under section 895 of the Companies Act 2006. A scheme need not be effective in every jurisdiction, but the court should usually be satisfied that it is likely to be effective in key foreign jurisdictions. Applying Re Maqyar BV [2014] BCC 448 and Sompo Japan Insurance Inc v Transfercom Ltd [2007] EWHC 146 (Ch), the evidence established likely recognition in the United States, Luxembourg and Switzerland.
5. The court relied on Re Lecta Paper UK Limited [2020] EWHC 382 (Chancery) in concluding that Article 67(2) of the Withdrawal Agreement supported recognition in EU Member States during the transition period.
6. Proposed modifications adding Swissport Cargo Services LP as a relevant obligor and requiring it to execute the Obligors’ Undertaking fell within the scheme’s modification clause and could not reasonably be expected materially adversely to affect creditors’ rights or interests.
7. The scheme was sanctioned.

First-instance sanction application under section 899 of the Companies Act 2006. The court referred to its earlier convening judgment, [2020] EWHC 1499 (Ch), and sanctioned the scheme at the present hearing.