New Look Financing PLC, Re

At the convening stage of a scheme of arrangement, the court does not assess the scheme’s merits or fairness. It considers proposed class composition and whether any jurisdictional or other roadblock would unquestionably prevent sanction.

Class composition depends on whether creditors’ rights against the scheme company, and the rights conferred by the scheme, are so dissimilar that they cannot consult together in their common interest. The comparison is concerned with rights, not interests, and must include relevant parts of a wider restructuring where they form part and parcel of the arrangement. Equal opportunities to participate in additional financing do not generally create separate classes.

For jurisdiction under article 8 of the recast Judgments Regulation, the presence of at least one creditor domiciled in the jurisdiction is distinct from the requirement that proceedings there be expedient.

New Look Financing plc applied under section 896 of the Companies Act 2006 for an order convening one meeting of creditors to consider a scheme equitising senior secured notes issued under a New York law-governed indenture.

The scheme formed part of a wider financial restructuring linked to a company voluntary arrangement affecting the group’s operating company. The proposed restructuring also included new money financing and the issue of shares outside the scheme. The central issues were class composition, jurisdiction, notification, remote conduct of the meeting, confidentiality of court documents and the appointment of a foreign representative.

1. Convening order. The application was granted. The court’s function at this stage was not to determine the merits or fairness of the scheme, which would arise at the sanction hearing. It was instead to consider class composition and whether any jurisdictional roadblock would unquestionably prevent sanction.
2. Class composition. Following Re Hawk Insurance Co Ltd [2001] 2 BCLC 480 at [30]–[33], the relevant question was whether the creditors’ rights were so dissimilar that they could not consult together in their common interest. The analysis considered both rights released or varied and rights conferred by the scheme. It was applied broadly to avoid giving an unwarranted veto to a minority, and focused on rights rather than creditors’ interests, following Re Primacom Holding GmbH [2013] BCC 201 at [44]–[45].
3. The court was entitled to look beyond the scheme document where the scheme formed part of a wider restructuring. The equal opportunity given to every scheme creditor to participate in the PIK Loan, subject to contributing new money before a commercially justified deadline, did not create different rights. Differences resulting from that election, including the allocation of voting shares, did not fracture the class. The same conclusion applied to the absence of any backstop fee.
4. The fact that approximately 92 per cent of creditors had signed the lock-up agreement did not fracture the class, consistent with Re Telewest Communications plc (No 1) [2005] 1 BCLC 752 at [53]. The court approved a single class.
5. Jurisdiction and procedure. The company was liable to be wound up for the purposes of section 895(2) of the Companies Act 2006. On the assumption that the recast Judgments Regulation applied, article 8 was satisfied if at least one scheme creditor was domiciled in the United Kingdom. That requirement was separate from whether proceedings in the United Kingdom were expedient. No jurisdictional roadblock was established.
6. The proposed three-week notification period was appropriate. The meeting could be conducted by webinar, provided that creditors had a virtual facility to confer. Access to specified confidential and commercially sensitive documents was properly restricted under CPR 5.4C(4). The court also appointed Mr Collier as foreign representative for Chapter 15 proceedings.