In the matter of Haya Holdco 2 Plc

On an application to sanction a creditors’ scheme, the court should consider statutory compliance, fair representation and bona fide voting, whether an intelligent and honest creditor might reasonably approve the scheme, and whether any other blot or defect exists. A scheme may be sanctioned where its wider restructuring depends on later conditions, provided those conditions are not conditions to the scheme’s effectiveness and the scheme itself contains no blot. A modification clause permitting changes necessary to implement the restructuring refers to changes reasonably necessary for its efficient implementation, rather than changes absolutely essential to the scheme’s operation. Technical modifications may be sanctioned where they were properly consulted upon and cannot reasonably be expected to cause material adverse effects.

Haya Holdco 2 plc sought sanction under section 899 of the Companies Act 2006 for a creditors’ scheme involving the exchange of existing senior secured loan notes for cash, new notes and equity in its parent company. The scheme followed the company’s accession as co-obligor to notes originally issued by its Spanish subsidiary.

The scheme creditors approved the proposal by more than 99 per cent by value. No creditor opposed sanction. The court considered statutory compliance, creditor representation and voting, the commercial fairness of the scheme, recognition in Spain, the absence of any blot, and proposed technical modifications to the scheme documents.

1. The court sanctioned the modified scheme.
2. The statutory requirements had been complied with and the majorities required by section 899 of the Companies Act 2006 had been achieved. The very high level of support and turnout established that the class had been fairly represented and had acted bona fide and for proper purposes.
3. Applying the usual sanction questions summarised in Re KCA Deutag UK Finance plc [2020] EWHC 2977 at [16], the court held that an intelligent and honest creditor, acting in its own interests, might reasonably approve the scheme. The evidence concerning the alternative outcome supported that conclusion.
4. The court was satisfied that there was no blot. There was a real prospect that the scheme would be recognised in Spain, and the court was therefore not acting in vain. Conditions relating to the wider recapitalisation did not condition the effectiveness of the scheme itself.
5. The proposed modifications satisfied clause 8.14. The requirement that changes be necessary meant reasonably necessary for the most efficient implementation of the recapitalisation, not absolutely necessary in the sense that the scheme could not otherwise take effect. The modifications had been consulted upon, were technical and mechanical, and could not reasonably be expected to have a material adverse effect on any scheme creditor.

This was a first-instance application for sanction of a scheme of arrangement. A prior convening hearing had been dealt with by Marcus Smith J on 9 May 2022; the present court did not revisit those provisional decisions.