Re Pizza Express Financing 2 PLC

The court considered a convening application under Part 26A of the Companies Act 2006 (as inserted by the Corporate Insolvency and Governance Act 2020) to convene meetings for a restructuring plan for Pizzaexpress Financing 2 Plc. The judge applied established scheme jurisprudence to determine jurisdiction under section 901A (company status, financial difficulties, and the presence of a "compromise or arrangement"), class composition under section 901C(1), adequacy of notice and the explanatory statement, and the appropriateness of the proposed meeting procedures.

The court held that jurisdiction was made out: the Plan Company is a company within the statutory definition, it faced financial difficulty affecting its going concern status, the proposals constituted a compromise or arrangement, and the plan's object was to mitigate financial distress. The court approved three classes (the Plan Member, holders of the existing senior secured notes (SSNs) and holders of the senior unsecured notes (SUNs)) and concluded that features such as the new-money facility, underwriting/backstop fees, reimbursement of advisers' expenses and directors' nomination rights did not fracture the SSN class. Notice and the explanatory statement were adequate and the proposed remote meeting procedures were acceptable. The judge found no substantive "blot" or roadblock: third‑party releases and a Plan Company contribution arrangement were justified, and Chapter 15 recognition in the United States was a conventional and probable route to effect cross‑border modification of New York‑law governed rights. The convening order was granted and customary confidentiality directions were made.

This was a convening hearing brought by Pizzaexpress Financing 2 Plc seeking directions to convene creditor and member meetings to consider a restructuring plan under Part 26A of the Companies Act 2006. The application arose from severe financial pressure on the Pizza Express Group following COVID‑19 related closures and trading disruption, significant prior losses and an imminent risk to going concern status.

• Nature of the application: a Part 26A convening application to summon three meetings (the Plan Member; holders of Existing SSNs; holders of SUNs) to consider a plan which would effect debt‑for‑equity and old‑debt‑for‑new‑debt swaps, convert and reduce Existing SSNs, allocate equity, provide a new‑money facility and discharge SUNs for a modest equity allocation.
• Parties: the Plan Company (Pizzaexpress Financing 2 Plc) and an Ad Hoc Group representing holders of Existing SSNs and SUNs.
• Issues framed: (i) jurisdiction under section 901A (five sub‑issues including company status, going concern/financial difficulty, whether the proposal constitutes a compromise/arrangement, the plan's purpose and EU service/Brussels recast jurisdiction); (ii) correct constitution of classes under section 901C(1); (iii) adequacy and timing of notice and the explanatory statement; (iv) appropriateness of meeting and voting procedures (including remote meetings); and (v) whether any "blots" or roadblocks existed such as controversial releases, contribution mechanisms or cross‑border recognition risks.

The court reasoned by reference to established Part 26 authorities and followed the approach adopted in recent Part 26A decisions. It found that the Plan Company satisfied the statutory definition of a company and had demonstrated the requisite financial difficulties affecting going concern. The plan contained adequate "give and take" to amount to an arrangement. The recast Judgments Regulation issue was addressed on the conventional assumption that Article 8 could support English jurisdiction for EU‑domiciled creditors where at least one English‑domiciled creditor exists in each class.

On class composition the court applied the familiar test that classes should be drawn so that members can consult together with a view to their common interest and concluded three classes were appropriate. Features potentially differentiating holders (new‑money participation, underwriting/backstop fees, reimbursement of advisors and directors' nomination arrangements) did not make it impossible for SSN holders to consult together and so did not fracture that class. Notice was held sufficient (twenty‑nine days in context), the explanatory statement adequate and remote meeting procedures acceptable.

On potential roadblocks the court held that third‑party releases and a Plan Company contribution mechanism were permissible where necessary to give effect to the compromise, and that Chapter 15 recognition in the United States was conventional and likely. The operational restructuring (China disposal and a CVA for property companies) and a parallel sales process did not render convening pointless and would be considered at the sanction stage. The court therefore granted the convening order and directed confidentiality procedures for commercially sensitive material.

The court granted the order sought and directed that meetings be convened. The judge held that jurisdiction under Part 26A was established (company status, financial difficulty affecting going concern, and that the proposals constituted a compromise or arrangement with the object of mitigating financial distress), the proposed classes were properly constituted, notice and the explanatory statement were adequate, meeting arrangements (including remote attendance) were appropriate and there were no "blots" or roadblocks (including in relation to third‑party releases, the Plan Company contribution mechanism and the probability of Chapter 15 recognition). Consequently the convening application succeeded and customary confidentiality directions were given.