Steinhoff International Holdings N.V., Re

When sanctioning a scheme of arrangement, the court may take account of the wider commercial and factual context, including connected restructuring steps and the interests of third-party objectors. The court must assess fairness realistically, while remaining slow to differ from a properly informed statutory majority in commercial matters.

A potential unfairness will not constitute a blot where it is contingent on unresolved legal rights, depends on a wider restructuring that has not yet been approved, and the objector will have a meaningful opportunity to be heard in the further approval processes. The court should not use the scheme sanction jurisdiction to determine disputed ownership rights or conduct a roving investigation into commercial negotiations.

Steinhoff International Holdings N.V., a Dutch-incorporated holding company, sought sanction under section 899 of the Companies Act 2006 for schemes affecting two classes of lenders. The schemes were intended to amend English-law financing arrangements and facilitate a wider global restructuring.

Conservatorium Holdings LLC was not a scheme creditor but claimed an interest because it asserted ownership of claims arising from alleged accounting irregularities. It objected that the connected global settlement unfairly treated competing claimants as owners of one claim and failed to preserve disputed sums in escrow.

The issues were whether Conservatorium had standing to object and whether the asserted unfairness amounted to a blot requiring refusal of sanction.

1. Standing. Conservatorium was permitted to object. The court’s discretion to hear third-party objections is wide and must be exercised commercially realistically. The present scheme could not sensibly be viewed in isolation from the wider restructuring of which it was a necessary first step. The court nevertheless cautioned that this did not give it a roving commission to investigate every alleged prejudice.
2. Statutory and jurisdictional requirements. The statutory majorities, meeting procedures, class composition and bona fides requirements were satisfied. The company had a sufficient connection with England for the scheme jurisdiction, and the court was satisfied that the scheme would be internationally effective.
3. Fairness and the alleged blot. The scheme was fair when assessed from the perspective of an intelligent and honest member of the relevant creditor classes. Approval offered the prospect of the wider settlement, new security and avoidance of a likely liquidation scenario. The court was slow to substitute its own commercial assessment for that of the creditors.
4. The company’s proposal to proceed on the assumption that Thibault and Titan were entitled to the disputed claim did not determine or compromise Conservatorium’s rights. If the assumption proved wrong, the company might have paid the wrong party without effectively discharging its liability. Conservatorium had no established right to require escrow arrangements.
5. The alleged unfairness was too remote and inchoate. The wider settlement remained subject to further approval processes in South Africa and the Netherlands, in which Conservatorium could be heard. Refusing sanction would risk unfairly preventing those processes from continuing. The scheme was therefore sanctioned, with the form of order to be settled separately.

First instance decision. The judgment records an earlier convening decision by Sir Alastair Norris in [2020] EWHC 3455 (Ch), but this was a separate stage of the same proceedings and is not treated as a cited case.