PGS ASA, Re

At a scheme-convening hearing, the court does not determine the merits or fairness of the proposed scheme. It considers whether there are obvious jurisdictional obstacles and should give at least a provisional view on class composition. Adequate notice is fact-sensitive, with regard to the scheme’s complexity, prior creditor consultation and urgency.

Creditors form a single class where their rights, assessed principally by reference to the insolvency comparator, are sufficiently similar for them to consult together. Differences in interest rates, maturity dates and immaterial fee arrangements do not necessarily fracture a class. A foreign company may fall within the scheme jurisdiction, and international effectiveness is ordinarily a matter for the sanction hearing.

PGS ASA, a Norwegian public company, applied under Companies Act 2006 section 896 for an order convening a meeting of lenders to consider a scheme of arrangement restructuring approximately $872 million of indebtedness.

The proposed scheme extended maturities, amended amortisation arrangements and provided fees and alternative consideration to scheme creditors. PGS proposed that all lenders vote in a single class. The application raised issues concerning notice, whether the proposal was a compromise or arrangement, class composition, PGS’s eligibility as a foreign company, sufficient connection with England and Wales, and possible restrictions under the Recast Judgments Regulation.

1. Convening stage. The court’s function at this stage was not to assess the merits or fairness of the scheme. It could, however, identify jurisdictional roadblocks which would unquestionably lead to refusal at sanction and should give at least a provisional ruling on class composition (para [37]).
2. Notice. The notice period was adequate. Adequacy is fact-sensitive and depends principally on the scheme’s complexity, the extent of prior consultation with creditors and the company’s urgency. The scheme was urgent, had been negotiated extensively and was relatively straightforward (paras [39]–[44]).
3. Compromise or arrangement. The proposal involved sufficient give and take. The maturity extension and revised repayment schedule were balanced by amendment and additional fees. It therefore fell within Part 26 of the Companies Act 2006 (para [45]).
4. Class composition. Separate meetings are required only for separate classes. The question is whether creditors’ rights are sufficiently similar to permit consultation in a common interest. Where insolvency is the relevant comparator, the court must identify the rights which creditors would have in that insolvency. Here, all lenders would have accelerated, pari passu claims, and would receive identical treatment under the scheme. Differences in contractual interest rates and maturity dates did not fracture the class. The lock-up fee, work fees, adviser fees, amendment fee, additional fee and convertible-note option were likewise immaterial or available on sufficiently common terms. One class was therefore appropriate (paras [46]–[58]).
5. Jurisdiction. Under sections 895(1)(a) and 895(2)(b) of the Companies Act 2006, a foreign company liable to be wound up as an unregistered company under Part 5 of the Insolvency Act 1986 may use the scheme jurisdiction. PGS had a sufficient connection through the English governing-law and jurisdiction clauses in the Credit Agreement (paras [59]–[60]).
6. Assuming that the Recast Judgments Regulation applied, the English jurisdiction clause fell within Article 25, and Article 8 provided an alternative potential basis. There was no jurisdictional roadblock. Following Re ColourOz Investment 2 LLC [2020] EWHC 1864 (Ch), international effectiveness was a discretionary matter for the sanction hearing, not a jurisdictional issue at convening (paras [61]–[67]).
7. The scheme meeting was convened, with directions for its conduct. A virtual meeting was approved in light of prevailing conditions (para [68]).

First-instance decision. No appellate history is stated in the judgment.