Re Good Box Labs Ltd

The court sanctioned a Restructuring Plan under Part 26A of the Companies Act 2006 (pursuant to an order made under s901F) and directed the joint administrators to give the Company’s consent to the Plan. The judge held that the statutory conditions for convening and voting at the class meetings (ss901C and 901D) had been satisfied: classes were properly constituted, meetings were properly convened and conducted, the explanatory statement was adequate, and the required majorities (apart from the Convertible Loan Holders) voted in favour. The cross-class cram-down in s901G was available because the court was satisfied that the dissenting class (the Convertible Loan Holders) would be no worse off than under the relevant alternative (an administration sale followed by liquidation), and the statutory threshold for cram-down was satisfied. The court concluded that company consent to a restructuring plan remains a jurisdictional precondition (following Re Savoy Hotel) but that, in appropriate circumstances, the court may direct an officeholder to give that consent; on the facts it was appropriate to direct the administrators to consent. The Administrators’ separate application to effect the proposed sale was dismissed.

Background and parties: The Good Box Co Labs Limited (the Company), a FCA-regulated small payment institution, entered administration in June 2022. NGI Systems & Solutions Limited (NGI) was a shareholder, supplier and principal creditor and provided administration funding. The joint administrators pursued rescue options and a creditors’ committee was formed. NGI promoted a Restructuring Plan which envisaged rescue funding, a syndicated debt facility, conversion of certain claims into equity and a reconstitution of the board and constitution.

Nature of the application: The application was for court sanction of the Restructuring Plan under Part 26A of the Companies Act 2006 (s901F) and, as a preliminary procedural matter, whether the court could direct the administrators to consent to the Plan on behalf of the Company.

Issues framed by the court:

• Jurisdictional requirements under s901A and whether company consent is a prerequisite;
• Whether the class meetings were properly constituted, convened and conducted in accordance with ss901C and 901D;
• Whether the explanatory statement and information supplied were adequate for class members to make an informed decision;
• Whether the statutory majorities voted in favour and whether meetings were fairly representative;
• Whether the conditions for a cross-class cram-down under s901G were satisfied;
• Whether the court should exercise its discretion to sanction the Plan and, if so, whether it should direct the administrators to give consent.

Court’s reasoning and findings: The judge found that the Company plainly met the statutory threshold of encountering financial difficulties and that the Plan was a compromise within the statutory purpose. The judgment reviewed precedent (notably Re Savoy Hotel) and held that company consent remains a jurisdictional requirement under Part 26A. The court examined the composition and convening of classes, corrected a minor slip in the convening order under the slip rule, and concluded classes were properly constituted and notices were adequate. The explanatory statement was held to be sufficient despite limited forward projections; the judge emphasised the need to judge adequacy in context and that creditors are the best judges of their own interests.

The Convertible Loan Holders voted against the Plan but the court applied s901G: the relevant alternative was an administration sale (estimated £375,000) followed by liquidation, in which the Convertible Loan Holders would likely recover nothing. The court was satisfied they would be no worse off under the Plan (receiving equity with potential value) and that the statutory threshold in s901G(4) was met. On discretionary grounds the judge concluded the Plan was fair, trade creditors would be paid in full, and NGI’s provision of funding and commercial concessions justified the proposed allocation. The court identified and rejected the Administrators’ specific objections (including issues about FCA authorisation, employee TUPE protection and the treatment of administrators’ fees) as insufficient to refuse sanction.

Company consent and directions: The court held that, while company consent is required, it could in suitable circumstances direct the administrators to give consent. On the facts — administrators had not actively opposed sanction and had been involved in the process and had not shown separate company interests requiring protection — the court directed the administrators to provide consent and then sanctioned the Plan. Consequential orders were made to end the administration and the administrators’ outstanding application to effect a sale was dismissed.

The court sanctioned the Restructuring Plan (under s901F of the Companies Act 2006) and directed the joint administrators to provide the Company’s consent to the Plan. The judge found that statutory requirements for convening and voting at the class meetings (ss901C and 901D) were satisfied; s901G’s cross-class cram-down conditions were met for the dissenting Convertible Loan Holders (they would be no worse off than the relevant alternative); and, on discretionary grounds, sanction was appropriate. The administrators’ separate application to effect a sale was dismissed.