In the Matter of Haya Holdco 2 plc

At a scheme convening hearing, the court considers class composition and whether any obvious jurisdictional obstacle or unquestionable discretionary bar exists. It does not determine the scheme’s merits or fairness.

A creditor class depends on legal rights under the scheme and in the relevant comparator, rather than creditors’ separate interests. Differences do not require separate classes unless the rights are so dissimilar that consultation with a view to a common interest is impossible. Interest terms, regulatory restrictions, modest consent or work fees, advisers’ fees and administrative nomination rights need not fracture a class where they do not materially distort voting or create materially different rights.

An English company applied under Part 26 of the Companies Act 2006 for permission to convene one meeting of the beneficial owners of two series of senior secured notes. The group faced likely English and Spanish insolvency proceedings if the notes, due to mature in November 2022, were not restructured.

The applicant had recently become a co-issuer, while the notes’ governing law and jurisdiction provisions had been changed from New York to English law. The proposed scheme provided for partial redemption, release of the balance, new notes and an equity allocation.

The court considered whether the noteholders were contingent creditors, whether jurisdiction existed notwithstanding the restructuring steps, whether the proposal was a compromise or arrangement, and whether differences among creditors required more than one voting class.

1. Application granted. The court ordered the convening of one meeting of the scheme creditors.
2. The ultimate beneficial owners of the global notes were contingent creditors. Their ability to obtain definitive notes capable of creating direct payment obligations brought them within Part 26 of the Companies Act 2006. The scheme could also authorise agents or attorneys to execute restructuring documents on their behalf.
3. The scheme could release claims against co-issuers, guarantors and other group obligors where those releases were necessary to make the compromise effective. Without them, claims against guarantors and resulting indemnity claims could recreate the liabilities being compromised.
4. At the convening stage, the jurisdictional inquiry was narrow. The applicant was an English-incorporated company liable to be wound up under the Insolvency Act 1986. It therefore qualified as a company for Part 26 purposes. No additional sufficient connection was required. The applicant’s accession as co-issuer and the change to English governing law, although intended to facilitate an English scheme, created no jurisdictional roadblock. Any wider discretionary concern remained for the sanction hearing.
5. The proposed exchange involved the necessary give and take and therefore constituted a compromise or arrangement. The existing debt would be partly redeemed and otherwise released in return for new notes and shares.
6. Class composition depended on the creditors’ legal rights in the relevant insolvency comparator and under the scheme, rather than their individual interests. All scheme creditors had identical secured and shortfall claims in the comparator and would receive the same pro rata package under the scheme. There was more to unite than divide them.
7. The differing interest rates, securities-law confirmations, 0.5% consent payment, payment of advisers’ fees, work fee, initial director-nomination rights and prior access to information did not fracture the class. The fees were too small or compensatory to distort voting, the nomination right was administrative, and appropriate disclosure safeguards removed any material informational inequality.
8. The four weeks’ formal notice was adequate given earlier consultation, the scheme’s ordinary complexity and the need to address financial distress before maturity. Questions of merits and fairness were reserved for any sanction hearing.

not stated in the judgment.