Re Selecta Finance UK Ltd

The court granted the company's uncontested application under Part 26 Companies Act 2006 to convene a single meeting of the holders of the existing senior secured notes to consider a scheme of arrangement. Key legal conclusions were that (i) adequate notice had been given for the convening hearing, (ii) the court had jurisdiction under Part 26 CA 2006 and, on the assumed applicability of the Recast Judgments Regulation, under the Regulation (notably by virtue of the English jurisdiction clause (Art. 25) and, alternatively, Article 8), (iii) the noteholders formed a single class for voting purposes because their legal rights were not so dissimilar as to make consultation impossible, and (iv) features relied on to suggest class fragmentation — including the Lock-Up Fee, advisers’ fee arrangements and customary securities-law confirmations — did not in the circumstances fracture the class. The court also approved virtual meeting arrangements and made ancillary directions including a declaration of the company's foreign representative and an order under CPR 5.4D(2) for notification of document applications.

Background and parties: The company, incorporated in England on 13 August 2020, was the newly acceding co-issuer of three series of senior secured notes originally issued by Selecta Group BV and originally governed by New York law. The notes aggregate to €1.24 billion plus CHF 250 million and share guarantees and security with other Group facilities subject to an intercreditor agreement which subordinates the notes to the RCF and a Liquidity Facility.

Nature of the application: The company applied for an order under section 896 CA 2006 convening a meeting of the relevant creditors (the ultimate beneficial holders of the global notes) to consider a scheme of arrangement under Part 26 CA 2006 to implement a balance-sheet restructuring, following amendments made by a supplemental trust deed which changed governing law and jurisdiction to England and made the company a co-issuer.

Issues framed: (i) whether notice of the convening hearing had been sufficient; (ii) whether the court had jurisdiction to sanction the scheme (including the relevance of the Recast Judgments Regulation and Articles 25 and 8); (iii) whether the noteholders constituted a single class of creditors for voting purposes; and (iv) procedural directions for the meeting including timing, format and ancillary relief.

Court’s reasoning and findings:

• Notice: The court accepted that notice was sufficient in the circumstances (press release of 8 September and Practice Statement Letter of 15 September; some urgency arising from a missed coupon and likely default triggers).
• Jurisdiction: The company fell within Part 26 CA 2006. The amendments to the trust deed effected a valid jurisdiction/prorogation agreement giving the English courts exclusive jurisdiction for issuer proceedings (Art. 25 of the Regulation was relied upon) and, alternatively, Article 8 was sufficiently engaged (presence of multiple defendants including English-domiciled creditors and suitability of hearing connected claims together).
• Class composition: Applying established authorities, the court held that the ultimate beneficial holders of the notes formed a single class because their legal rights were substantially the same both as to the position absent the scheme (pro rata recoveries subject to the intercreditor ranking) and as to entitlements under the proposed scheme. Differences identified (different interest rates and currencies, the Lock-Up Fee, advisers’ fee arrangements and securities-law confirmations) were not, on the facts, material enough to prevent a single class meeting.
• Procedure and ancillary orders: The court approved a virtual meeting to be convened on 21 October with related timetables, made a formal declaration of the company's foreign representative for Chapter 15 recognition purposes, and ordered that notice be given under CPR 5.4D(2) if any third party sought documents from the court file.

Subsidiary findings included acceptance of expert evidence as to the effectiveness of the amendments under New York law and an assessment of urgency driven by cashflow forecasts and the likely consequences of enforcement if the scheme were not pursued.

The court ordered that a single convening meeting of the Scheme Creditors be summoned (the application was allowed). The rationale was that sufficient notice had been given, the court had jurisdiction under Part 26 Companies Act 2006 (and, on the assumed applicability of the Recast Judgments Regulation, under Articles 25 and 8), and the noteholders formed a single class because their legal rights were not so dissimilar as to make collective consultation impossible; ancillary directions (virtual meeting, timetable, declaration of foreign representative and confidentiality notification order) were appropriate.