DTEK Energy BV, Re

At a scheme convening hearing, the court determines whether the proposed meetings can properly be held, without deciding the scheme’s merits or fairness. The court considers notice, jurisdiction, class composition, voting arrangements and any apparent roadblock to later sanction.

Creditors may be placed in one class where their rights are sufficiently similar to enable them to consult together in pursuit of a common interest. Material differences do not necessarily prevent a single class. A court should be cautious about allowing ex parte asset-preservation measures to create a veto class. Third-party releases and provisions permitting future amendments may be sanctioned in principle where they are ancillary, commercially justified and properly protected, but their ultimate fairness remains for the sanction hearing.

DTEK Energy BV, a Netherlands company, and DTEK Finance plc, an English company, sought convening orders for inter-conditional schemes under Part 26 of the Companies Act 2006. The schemes proposed to restructure bank debt and senior notes following payment defaults and projected inability to service the debt.

Gazprombank (Switzerland) Ltd objected to being included in the single class of bank scheme creditors. It relied on foreign freezing and conservatory attachment orders, differences in obligors and the absence of certain evidence concerning insolvency and international recognition. The central issues were whether jurisdiction existed, whether the proposed classes were properly constituted, whether the meeting arrangements were adequate, and whether any matter made convening the meetings pointless.

1. Outcome. The court directed a single meeting for each scheme. The convening stage was not the occasion to determine the schemes’ merits or fairness.
2. Notice and jurisdiction. Twenty-one days’ notice was sufficient in the circumstances, having regard to the schemes’ relative simplicity, prior creditor consultation, financial urgency and the sophistication of the creditors. Jurisdiction existed under section 895 of the Companies Act 2006. Energy had a sufficient connection through English-law obligations and jurisdiction clauses. Finance was an English company, the bank creditors were compromiseable creditors, and beneficial noteholders could be treated as contingent creditors: Re Port Finance Ltd [2021] EWHC 378. Each scheme involved the requisite element of give and take: Re Lehman Bros International Europe (No 2) [2019] BCC 155 at [24]. Energy’s recent assumption of primary liability did not defeat jurisdiction: Re Gategroup Guarantee Ltd [2021] EWHC 304 (Ch).
3. Class composition. The correct comparator was the creditors’ rights in the anticipated insolvency. Differences in payment dates, interest rates and guarantee structures did not prevent consultation together where the claims would be accelerated, unsecured and rank pari passu. The question was whether there was more to unite than divide the creditors on the key issue of imminent insolvency or delayed payment in full. Gazprombank’s freezing and conservatory attachment orders created no sufficiently distinct immediate security rights. Its rights against other group obligors were also irrelevant to class analysis, which principally compared rights against Energy. The measures did not justify a separate class or a veto right.
4. Fees and meeting arrangements. Transaction fees, work fees, pre-existing adviser fees and the disclosed success fee did not fracture the classes on the facts. The proposed webinar arrangements were adequate, applying the guidance in Re Castle Trust Direct plc [2020] EWHC 969 (Ch).
5. Roadblocks. A future-amendment provision was not a fundamental obstacle where it had a clear commercial purpose and was approved by the requisite majority, although the court’s caution in Re Cape plc [2007] Bus LR 109 remained relevant. Releases of third-party guarantees and liabilities could fall within the jurisdiction where necessary to implement, and ancillary to, the arrangement: Re Noble Group [2018] EWHC 2991 at [24]-[28], and Re Lecta Paper UK Ltd [2020] EWHC 382 (Ch). International effectiveness was principally a sanction-stage issue. There was no evidence that recognition would make sanction impossible, so it was not a roadblock to convening.