In The Matter Of Hilding Anders International AB

The court granted a Convening Order to permit two connected schemes of arrangement under Part 26 of the Companies Act 2006, finding no obvious or insurmountable jurisdictional impediment. The judge held that the proposals constituted a "compromise or arrangement" and that the statutory requirement that the proposals relate to a "company" liable to be wound up under the Insolvency Act 1986 was satisfied in relation to the overseas companies. The court applied the established test for class composition (that class members' rights must not be so dissimilar as to prevent consultation in their common interest) and found it appropriate to convene separate meetings of (i) the SFA Scheme Creditors and (ii) the NPA Scheme Creditors.

The judge considered subsidiary features (professional fees, the Lock-Up Early Bird Fee, the backstop fee, the New Money Facility and the Turnover Deed) and concluded none fractured the proposed classes because either the benefits were available to all on equal terms, were modest in amounts relative to the restructuring, or were arrangements between creditors inter se that did not alter their substantive rights against the scheme companies. Directions for the scheme meetings were approved and the Convening Order was made.

Background and parties: Two companies in the Hilding Europe and Asia Group (Hilding Anders International AB (HAI), incorporated in Sweden, and Anders Lux Holdings S.à r.l. (Lux Holdco), incorporated in Luxembourg) applied for a Convening Order to hold two connected schemes of arrangement. The Schemes relate to amendments to an English-law governed Senior Facilities Agreement (SFA) under which HAI is the borrower of a Term Loan and to Notes issued by Lux Holdco under a Notes Purchase Agreement (NPA). The Term Loan and Notes are "stapled" so the same creditors appear in both capacities.

Nature of the application and relief sought: The applicants sought an order convening separate meetings of (i) the SFA Scheme Creditors and (ii) the NPA Scheme Creditors, to consider and approve two connected schemes of arrangement intended to implement a restructuring that elevates an emergency New Money Facility to super-senior status, provides a debt-for-equity swap of the Notes into New TopCo equity, and amends the SFA to permit interest capitalisation among other changes.

Issues framed: (i) whether there was any obvious and insurmountable jurisdictional impediment to the court exercising scheme jurisdiction in relation to the overseas companies, and (ii) whether the proposed creditor classes were properly constituted for the purposes of convening meetings.

Reasoning and subsidiary findings:

• Jurisdiction: The judge followed the principle that the convening hearing need only address whether there is any obvious and insurmountable impediment. The proposals were found to be a "compromise or arrangement" and the statutory definition of "company" (s.895(1) Companies Act 2006) includes overseas companies liable to be wound up under Part V of the Insolvency Act 1986. The existence of a sufficient connection with England (for example, English governing law and exclusive jurisdiction clauses in the SFA and NPA) was noted as relevant for sanction but not fatal at the convening stage.
• Class composition: Applying the test that class members must not have rights so dissimilar as to prevent consultation in their common interest, the judge found the SFA Scheme Creditors to be a homogeneous class (senior secured creditors under the Term Loan) and the NPA Scheme Creditors a homogeneous class (subordinated holders of the Notes). The court examined features raised as potential distinctions—the payment of professional fees to ad hoc group members, a Lock-Up Early Bird Fee, a backstop fee for underwriting the New Money Facility, the availability of the New Money Facility to all SFA creditors until the sanction hearing, and a Turnover Deed between some creditors—and concluded none fractured the classes: fees were modest or market-aligned, rights under the New Money Facility were made available pro rata to all until the sanction date, and the Turnover Deed altered only inter-creditor arrangements and did not change rights against the scheme companies.
• Practical matters: The explanatory statement and procedural directions were considered adequate for commercial creditors.

Disposition: The court made the Convening Order and gave directions for the two proposed scheme meetings.

This is a first-instance disposal: the application for a Convening Order was granted. The court found no obvious or insurmountable jurisdictional impediment, treated the proposals as a "compromise or arrangement" within the scope of Part 26 Companies Act 2006, and concluded the proposed division into two creditor classes (SFA Scheme Creditors and NPA Scheme Creditors) was appropriate because the alleged distinctions (fees, New Money Facility rights, Turnover Deed) did not render the classes so dissimilar as to prevent consultation in their common interest. Accordingly the Convening Order was made and directions for the meetings were given.