Atento UK Limited & Anor, Re (convening judgment)

This was an application under section 901C of the Companies Act 2006 for an order convening creditor meetings to consider restructuring plans for two Plan Companies in the Atento group. The court found the statutory gateway in Part 26A and section 901A was met: the companies faced imminent financial difficulties and the proposed compromise or arrangement had the purpose of mitigating those difficulties. The court held notice of the convening hearing to be adequate, that the proposed four-class structure was appropriate and not susceptible to further division, and that commercial features such as backstop and consent fees, advisers' fee reimbursements, and the right to participate in new-money financing did not, on the evidence, fracture classes or create a jurisdictional road‑block to convening meetings. The court accepted the directors' assessment of the relevant alternative (liquidation) and the valuation evidence showing that certain classes would be out of the money in the alternative. On that basis the convening order was made.

Background and nature of the application.

The application was by Atento UK Limited and Atento Luxco 1 for a convening order under section 901C of the Companies Act 2006 to call meetings of creditors to consider proposed restructuring plans affecting a series of English‑law governed notes and ISDA liabilities. The plans formed part of a wider restructuring of the Atento group and depended on the injection of Exit Financing (US$76 million in aggregate) to avoid an imminent liquidity shortfall projected by 1 December 2023.

Parties and relevant liabilities.

• The Plan Companies were Atento UK and the Issuer (Atento Luxco 1). The Plan Liabilities comprised several series of notes (the 2026 notes, existing 2025 notes, new money 2025 notes and new junior lien notes) and certain swap liabilities under ISDA agreements. The proposals grouped creditors into four classes (A–D) with differing proposed treatments including amendments to notes, extinguishment of some series in exchange for ordinary shares, and rights to subscribe for preferred shares as part of the Exit Financing.

Procedural posture and issues before the court.

This was a convening hearing. The matters for decision were: adequacy of notice, jurisdictional requirements under Part 26A/section 901A, class composition, any non‑merits obstacles to convening meetings, and practical issues about documentation and timetables.

Court's reasoning and findings.

• Notice: the explanatory statement (PSL) and 21 days' circulation were adequate given creditor sophistication and prior engagement; where notes were held in clearing systems the companies had given notice appropriately through those systems.
• Jurisdiction: the court was satisfied there was a realistic prospect of establishing the necessary connection with the jurisdiction and of meeting the statutory conditions (the companies were liable to be wound up under the Insolvency Act 1986; the companies were encountering financial difficulties; the proposed compromise had the requisite purpose).
• Class composition: four classes were appropriate because differences in rights and security justified separate classes; features such as the right to participate in new money, backstop fees and a consent fee did not, on the evidence, produce relevantly different rights that would require further subdivision. The court treated issues about whether such commercial features rendered a future sanction unfair as matters for the sanction hearing rather than the convening hearing.
• Other obstacles: deeds such as the Deed Poll and Deed of Contribution did not create a road‑block; payments of advisers' fees as reimbursement did not fracture classes; the international dimension did not make convening pointless.
• Alternatives and valuations: the directors' assessment of liquidation as the relevant alternative was accepted for present purposes. An expert report (A&M) indicated classes C and D would receive nil in liquidation whereas implementation of the plans produced estimated recoveries above nil for most classes, supporting the commercial rationale for convening.

Disposition. The court granted the convening order and fixed meetings and a timetable, with the sanction hearing listed subsequently.

The application for a convening order under section 901C of the Companies Act 2006 is allowed. The court concluded the statutory conditions in Part 26A/section 901A were met, notice was adequate, the proposed four-class structure was appropriate and not fractured by the commercial features of the proposals, and there were no jurisdictional or practical road‑blocks to convening meetings; accordingly the convening order was made.