Atento UK Limited & Anor, Re

The court granted sanction under section 901F of the Companies Act 2006 for two cross-class restructuring plans proposed by Atento UK Limited and Atento Luxco 1. The judge applied the established Part 26 style principles adapted to restructuring plans: (i) compliance with statutory requirements; (ii) whether classes were fairly represented and the majorities acted bona fide; (iii) whether an intelligent, honest creditor could reasonably approve the plan; and (iv) whether there was any blot or defect. The court was satisfied on each point, including that there was a sufficient connection with England (all plan liabilities were governed by English law), and that the plans were likely to have substantial effect in relevant foreign jurisdictions given creditor support, lock-up agreements and expert evidence. The judge also resolved concerns about consent fees and declared valid the appointment of the nominated foreign representative.

This was a sanction application by two Plan Companies within the Atento group for orders under section 901F of the Companies Act 2006 to sanction two restructuring plans that form part of a wider recapitalisation. The plans depended on US$76 million of Exit Financing and proposed varying entitlements of four creditor classes (Class A: existing 2025 note-holders; Class B: new money 2025 note-holders; Class C: new junior lien note-holders; Class D: swap providers and 2026 note-holders).

Nature of the application:

• An order sanctioning the two restructuring plans under section 901F Companies Act 2006.
• Declaratory relief recording the valid appointment of a foreign representative to pursue recognition or other steps abroad.

Procedural posture and facts:

• The group faced a near-term liquidity shortfall projected by 1 December 2023; without the plans the Exit Financing would not be provided and liquidation was the likely alternative.
• The convening hearing was earlier determined in a separate judgment ([2023] EWHC 2754 (Ch)); Plan Meetings were held on 13 November 2023 at which each class approved the plans by the requisite majorities (100% by value for classes A, B and C; 99.55% for class D).
• The plans varied the economics for each class (extensions, amendments, extinguishments and allocations of equity and rights to subscribe for preferred shares) as described in the judgment.

Issues framed by the court:

• Whether the statutory requirements for convening and voting had been satisfied.
• Whether each class was fairly represented and the majority acted bona fide, including whether consent fees undermined representativeness.
• Whether a creditor acting in its own interests could reasonably approve the plans.
• Whether there was any blot or defect in the plans.
• In the cross-border context, whether there was a sufficient connection with England and whether the plans were likely to have substantial effect in other relevant jurisdictions.

Court’s reasoning and outcome:

• The court found statutory compliance, including proper convening and the requisite majorities at the Plan Meetings; earlier determinations on class composition were not revisited.
• Turnout and voting patterns showed classes were fairly represented and majority voters acted bona fide; the court concluded that consent fees did not indicate lack of representativeness given the zero-return alternative for some creditors.
• The plans were ones that intelligent and honest creditors could reasonably approve; directors had recommended them and relied on financial advisers and expert evidence of projected returns superior to the liquidation alternative.
• No blot or defect was identified.
• On international effectiveness, the court accepted that a sufficient connection existed (all plan liabilities governed by English law) and that the plans were likely to have substantial effect abroad given creditor support, lock-up agreements and expert jurisdictional opinions; the court recorded the valid appointment of Mr Nelson-Smith as foreign representative.

The court therefore sanctioned the plans and recorded the appointment of the foreign representative.

The court sanctioned the two restructuring plans under section 901F Companies Act 2006 and declared valid the appointment of Mr Nelson-Smith as foreign representative. Rationale: statutory requirements and the convening order were complied with; each class was fairly represented and the majorities acted bona fide; the plans were such that intelligent and honest creditors could reasonably approve them; there was no blot or defect; and there was a sufficient connection with England with plans likely to have substantial effect in relevant foreign jurisdictions.