Haya Holdco 2 Plc, Re

On an application to sanction a scheme of arrangement, the court must be satisfied that the statutory requirements have been met, the class was fairly represented, the majority acted bona fide and for proper purposes, and an intelligent and honest creditor might reasonably approve the scheme. The court must also consider whether the scheme contains any blot and, where it has international elements, whether it will be recognised and effective in relevant jurisdictions.

Creditors are generally better judges than the court of the commercial advantages of a scheme. Properly disclosed early-support, consent and risk fees do not necessarily undermine fairness, particularly where they serve specific purposes and are unlikely materially to influence voting.

Haya Holdco 2 Plc sought sanction of a scheme under Companies Act 2006, Part 26. The scheme followed an earlier sanctioned restructuring and was intended to distribute proceeds from the proposed sale of the group’s principal operating subsidiary among holders of replacement notes.

The convening order directed a single meeting. The meeting approved the scheme overwhelmingly. The issues at sanction included statutory compliance, class constitution and representation, creditor voting, payments made to supporting creditors, the scheme’s international effectiveness, and whether any defect or blot prevented sanction.

1. Sanction granted. The court made the order sought.
2. The relevant sanction questions were those summarised in Re KCA Deutag UK Finance PLC [2020] EWHC 2977 (Ch): statutory compliance; fair class representation and bona fide voting for proper purposes; whether an intelligent and honest creditor acting in his interests might reasonably approve the scheme; and whether any blot or other defect existed. International schemes additionally require consideration of whether the court would be acting in vain because the scheme might not be recognised or effective abroad.
3. The statutory requirements were satisfied. The company’s English incorporation supplied the necessary jurisdictional connection, the statutory majorities were achieved, and the meetings complied with the convening order. Minor amendments had been adequately brought to creditors’ attention.
4. The court did not reconsider class constitution at sanction. That issue had been considered in detail at the convening hearing, and the approach in Re Global Garden Products Italy SpA [2017] BCC 637 (Ch), together with the absence of opposition, justified leaving the convening decision undisturbed.
5. The class was fairly represented and creditors had acted bona fide. The court applied the principle that creditors are better judges than the court of what is commercially advantageous to them. The overwhelming support and evidence that creditors would receive materially more under the scheme justified the conclusion that the scheme could reasonably be approved.
6. The early bird fee, consent fee and risk fees were properly disclosed, paid for specific purposes connected with preparation of the scheme, and were neither unusual nor unfair. They were unlikely materially to have influenced the votes and did not adversely affect fairness.
7. The evidence established the probable effectiveness of the scheme under New York and Spanish law. The change of governing law was effective under New York law, so the releases would be recognised there. No blot was identified.