Atento UK Limited & Anor, Re

At a convening hearing for restructuring plans, the court must determine whether there are jurisdictional or practical obstacles to convening creditor meetings, without deciding the ultimate merits or fairness of the plans.

Consent fees do not necessarily fracture a creditor class. The relevant questions include whether the fee is likely materially to influence voting and whether all class members have the same opportunity to receive it. Any unfair effect on the vote is ordinarily a matter for the sanction hearing.

Backstop fees and adviser fees do not fracture a class where equivalent opportunities exist, or where the fees discharge liabilities payable irrespective of sanction. A financing commitment by an affiliate of a creditor does not itself create a separate class.

Atento UK Limited and Atento Luxco 1 applied under Companies Act 2006, section 901C, for orders convening meetings of creditors to consider restructuring plans.

The plans addressed four creditor classes, amended or extinguished financial liabilities, released claims against subsidiary guarantors, and provided new financing. The companies faced an imminent liquidity shortfall and relied on liquidation as the relevant alternative.

The court considered notice, jurisdiction, the status of creditors, class composition, possible jurisdictional roadblocks, and practical arrangements for the meetings. The central issues included whether consent fees, backstop fees, adviser fees and an affiliated financing provider required further division of the proposed classes.

1. Convening order. The court made the convening order. The proposed explanatory statement, notice and timetable were adequate, and the urgency caused by the anticipated liquidity shortfall justified the period of notice given.
2. Jurisdiction. The companies satisfied the requirements of Companies Act 2006, section 901A. Atento UK was liable to be wound up under the Insolvency Act 1986. The Issuer, although unregistered, was likewise a company for Part 26A purposes. The English-law governing provisions gave at least a realistic prospect that the Issuer’s connection with the jurisdiction and international effectiveness requirements would be established at sanction. Those questions were principally for the sanction hearing.
3. Financial difficulties and purpose. The evidence established prolonged financial difficulties and a likely inability to continue as a going concern without restructuring. The plans involved a compromise or arrangement and were intended to mitigate those difficulties by providing new money and modifying or releasing liabilities.
4. Class composition. The four classes reflected materially different existing rights and rights under the plans. The right of all relevant creditors to participate in the tranche A financing did not fracture the classes. Nor did the backstop fees, which were offered on identical terms. Adviser fees payable irrespective of sanction discharged existing liabilities and did not fracture the classes.
5. Consent fee. The consent fee, available to all Class D Creditors voting in favour and remaining open until the meeting, was unlikely materially to influence the choice between receiving nothing and receiving something under the plans. It therefore did not require further division of the class. Any concern that it unfairly skewed the vote was a matter for the sanction hearing and the court’s assessment of whether the vote represented the class’s interests.
6. The affiliate’s commitment to provide further financing was not a right conferred by the plans in compromise of existing creditor rights and did not fracture the class. The Deed Poll, Deed of Contribution, international aspects and exclusion of some creditors created no roadblock making meetings pointless.

First-instance convening decision. No prior appellate decision was stated in the judgment.