Plusholding GmbH, Re

For a scheme convening hearing, a foreign company may propose a scheme where the statutory requirements are met. An arrangement requires a compromise of existing rights in return for new rights, involving sufficient give and take. Creditors form one class where their rights are not so dissimilar that they cannot consult together in their common interest. A lock-up agreement, backstop fee, original issue discount, reimbursement of advisers’ expenses, releases, or limited governance rights will not fracture the class where those matters do not materially undermine the creditors’ common interest in choosing between the scheme and the likely alternative. The court must also be satisfied that notice and explanatory information are adequate and that no obvious obstacle impedes the scheme.

PlusHolding GmbH, a German-incorporated holding company, applied under Part 26 of the Companies Act 2006 to convene a single meeting of 36 lenders. The proposed scheme would restructure approximately €264.7 million of English-law term facilities through debt reduction, maturity extensions, reinstatement of debt, new-money arrangements, changes in ownership and governance, and releases.

The issues were whether the court had statutory jurisdiction, whether the lenders constituted one class, whether features of the restructuring created materially different interests, and whether notice and scheme materials were adequate.

1. Application granted. The court ordered the convening of a single meeting of the scheme creditors.
2. The statutory jurisdiction existed. Under section 895(1)(a) of the Companies Act 2006, the applicant had to show a compromise or arrangement between a company and its creditors. A foreign company was included within “company” under section 895(2)(b). The separate question whether the court should exercise jurisdiction in the international sense was reserved for the sanction hearing, although the English-law obligations under the term facilities provided a significant connecting factor.
3. The proposed transaction was an arrangement because it compromised existing rights in return for new rights and therefore contained the necessary element of give and take.
4. The 36 lenders constituted a single class. Their existing rights were materially identical, and the scheme compromised and treated those rights in substantially the same way. The governing question was whether their rights were so dissimilar as to make consultation in their common interest impossible.
5. The lock-up agreement did not fracture the class because it was open to all creditors and created no relevant financial distinction. Backstop fees and the original issue discount were commercial pricing features, available rateably to creditors who chose to participate, and did not prevent common consultation. Reimbursement of advisers’ fees merely defrayed expenses and conferred no bounty or net benefit. Releases and limited governance rights likewise did not create a material divergence of interest.
6. The notice period was sufficient for sophisticated commercial creditors. The explanatory statement was adequate, and no obvious roadblock was identified which would impede the scheme’s operation or effectiveness.