DTEK Energy BV, Re

The court considered applications under Part 26 of the Companies Act 2006 for convening meetings of creditors to consider two inter-conditional schemes of arrangement promoted by DTEK Energy BV and DTEK Finance plc. At the convening stage the court confined itself to the limited functions of (i) assessing adequacy of notice, (ii) threshold issues of jurisdiction (including s.895 of the Companies Act 2006 for a foreign company), (iii) class composition, (iv) arrangements for ascertaining creditor wishes at meetings, and (v) whether any "roadblock" existed that would make sanctioning pointless.

The court held that 21 days' notice was adequate in the circumstances, that there was a sufficient connection to permit jurisdiction to be considered at sanction, and that each scheme could be put to a single class meeting (notwithstanding challenges by Gazprombank based on a Cypriot freezing order and a Dutch conservatory attachment). The court found the proposed Explanatory Statement and webinar arrangements acceptable for convening purposes.

Potential obstacles (the power to amend New DEBV Notes after sanction, releases of third‑party guarantees, and international effectiveness) did not constitute roadblocks at the convening stage; they remain matters for the sanction hearing. The court therefore directed that single meetings of creditors be convened for each scheme.

Background and parties:

DTEK Energy BV (Energy), a Netherlands company and parent of the DTEK Group, and its English subsidiary DTEK Finance plc (Finance) sought to restructure parts of the Group's indebtedness by two inter‑conditional Part 26 schemes. The Group had three categories of third‑party debt and a separate issue of New York law notes (the Notes) maturing in 2024: the borrowers and guarantors had been in default for about a year and projected cashflows showed inability to service debt to maturity. The proposed schemes would cancel existing notes and guarantees and replace them with new instruments ("New DEBV Notes" and "New DOG Notes") extending maturities to 2027.

Nature of the application and procedural posture:

• The applications were for orders convening a single meeting of creditors for each scheme to vote on the proposals. The hearing was a convening hearing before Sir Alastair Norris on 16 April 2021, with this written judgment delivered on 5 May 2021.

Issues framed by the court:

• Adequacy of notice of the convening hearing;
• Existence of jurisdiction (including the position of a foreign company under s.895 Companies Act 2006 and the relevance of English law obligations/exclusive jurisdiction clauses);
• Class composition and whether single classes were appropriate for the bank creditors and the noteholders;
• Arrangements for ascertaining creditor views at the meetings, including the Explanatory Statement and webinar format;
• Whether any "roadblocks" existed such that convening meetings would be pointless (including provisions permitting future amendment of New DEBV Notes, releases of third‑party guarantees and issues of international recognition/effectiveness).

Court's reasoning and conclusions:

• Notice: Given the complexity, consultation with creditors, and urgency of the restructuring, the Practice Statement Letter circulated 21 days before the convening hearing was sufficient to enable creditors to raise relevant issues.
• Jurisdiction: The court was satisfied there was a sufficient connection to permit the schemes to be considered under Part 26; issues as to the fairness of some steps (for example Energy becoming a primary obligor shortly before promotion) were reserved for the sanction hearing.
• Class composition: The court accepted the applicants' analysis that the bank creditors and aggregated beneficial holders of the Notes could each be treated as single classes because their comparative rights against Energy in an insolvency were effectively the same. Gazprombank's challenge to be treated as a separate class was rejected. The court examined Gazprombank's Cypriot freezing order and Dutch conservatory attachment and concluded they did not create present proprietary rights dissimilar to other bank creditors, nor were they likely to survive an intervening insolvency; accordingly a separate class was unnecessary.
• Arrangements for voting and disclosure: The Explanatory Statement as provided showed no glaring deficiencies for the convening stage and the proposed webinar meeting format was acceptable in line with recent guidance.
• Roadblocks: (a) a contractual power to amend New DEBV Notes after sanction was not fatal to convening though the court noted the need for caution; (b) releases of third‑party guarantees and liabilities can, if ancillary and necessary to give effect to the scheme, be permissible and are matters for sanction; (c) while international effectiveness is important, absence of expert proof at the convening stage did not demonstrate that sanction would necessarily be impossible and so was a matter for the sanction hearing.

Outcome at convening stage:

The court directed that single scheme meetings be convened for each scheme. The merits, fairness and international recognition issues were reserved for the sanction hearing.

The court granted the applications to convene single creditors' meetings for each Part 26 scheme. It concluded that notice was adequate, that jurisdiction existed to consider the schemes, that single classes for the bank creditors and noteholders were appropriate (rejecting Gazprombank's application for separate class treatment), and that no "roadblock" existed at the convening stage to make sanctioning pointless. Issues of fairness, international effectiveness and detailed disclosure remain for the sanction hearing.