In the matter of Yunneng Wind Power Co, Ltd

At the convening stage of a restructuring plan, the court considers whether the proposed creditor classes are properly constituted by comparing creditors’ legal rights before and under the plan. Creditors should be placed in the same class where their rights are not so dissimilar as to make consultation towards a common interest impossible.

The relevant comparison concerns legal rights against the company, rather than separate commercial interests or rights against third parties. Differences in drawings, maturity, ranking and repayment terms do not necessarily fracture a class. Elevation rights will not create a class issue where they are available to creditors generally on a pro rata basis. Cross-holdings and a lock-up agreement do not themselves affect class composition.

Yunneng Wind Power Co, Ltd, a Taiwanese company whose finance documents were governed by English law, applied for an order convening five meetings of finance creditors to consider a restructuring plan under Part 26A of the Companies Act 2006.

The company faced severe liquidity difficulties and proposed substantial new financing, amendments to existing debt arrangements, changes in priority and extended maturities. The application concerned jurisdiction, the statutory conditions for a restructuring plan, creditor class composition, possible roadblocks, notice and the adequacy of the explanatory statement. No creditor opposed the application.

1. Application granted. Five meetings of the plan creditors were directed to be convened.
2. The company was a company for the purposes of section 901A of the Companies Act 2006, notwithstanding its incorporation in Taiwan. The English-law governing provisions and English jurisdiction clauses provided a sufficient connection for the court’s jurisdiction, although the discretionary connection issue would arise principally at sanction.
3. The company satisfied Conditions A and B under sections 901A and 902A of the Companies Act 2006. The evidence established financial difficulties affecting its ability to continue as a going concern and a proposed compromise intended to mitigate those difficulties.
4. For class composition, the court compared creditors’ rights in the absence of the plan with their rights out under the plan. The governing question was whether the rights of members of a proposed class were so dissimilar as to make it impossible for them to consult together in pursuit of a common interest: Re Hawk Insurance Company Ltd [2002] BCC 300 at [30].
5. The comparison concerned legal rights against the company, not separate commercial interests or rights against guarantors or other third parties. Differences in the nature of liabilities, drawings, maturity dates, ranking and repayment profiles did not make consultation impossible. Elevation rights did not fracture a class because they were available to all creditors pro rata, consistent with Re ED&F Man Holdings Ltd [2022] EWHC 433 (Ch).
6. Cross-holdings did not affect class composition, although they could be relevant at sanction: Re ColourOz Investment 2 LLC [2020] EWHC 1864 (Ch) at [88]. The proposed lock-up agreement likewise did not of itself fracture a class: Re Telewest Communications plc (No. 1) [2004] EWHC 924 (Ch).
7. The proposed five classes were appropriate. There were no roadblocks requiring refusal of the convening order. Adequate notice had been given, and the explanatory statement communicated the material matters comprehensibly to its intended recipients. Amendments correcting identified errors were permitted before circulation.
8. The court therefore made the convening order in the proposed terms, with meetings to be held on a hybrid basis.