Atento UK Limited & Anor, Re

At a restructuring-plan sanction hearing, the court should ask whether the statutory requirements have been met, creditors were fairly represented and acted bona fide, creditors acting in their own interests could reasonably approve the plan, and the plan contains no blot or defect.

Where an international element exists, the court must also consider sufficient connection with England and likely substantial effect in the relevant foreign jurisdictions. English-law governing liabilities may establish sufficient connection for a foreign company. International effectiveness need not extend worldwide, provided the plan is likely to be effective in key jurisdictions where the group operates or holds substantial assets.

Atento UK Limited and Atento Luxco 1 applied under section 901F of the Companies Act 2006 for sanction of restructuring plans affecting four classes of creditors. The plans formed part of a wider group restructuring intended to avoid an imminent liquidity shortfall and likely liquidation.

The creditor meetings approved the plans by substantial majorities. The court considered statutory compliance, class representation, creditor conduct, commercial fairness, defects in the plans, jurisdictional connection, international effectiveness, and the validity of the appointment of a foreign representative.

1. The court sanctioned both restructuring plans under section 901F of the Companies Act 2006. The statutory majorities had been obtained and the convening order had been complied with. The court did not revisit class composition, which had been determined at the convening hearing.
2. Each class had been fairly represented and creditors had acted bona fide. The consent fee available to Class D Creditors did not undermine the vote. Those creditors faced a zero return in the relevant alternative, and a vote accepting a plan that provided value remained representative and bona fide.
3. The plans were ones which intelligent and honest creditors acting in their own interests might reasonably approve. The court was slow to differ from the commercial judgment of creditor meetings, particularly where the plans offered an alternative to liquidation and had been recommended on professional financial advice.
4. There was no blot or other defect in either plan.
5. For the Issuer, the English-law governing all plan liabilities established sufficient connection with England. In an international restructuring, the plans need not be effective worldwide. It was sufficient that they were likely to have substantial effect in the key jurisdictions where relevant group companies were incorporated or had operations and substantial assets. English-law liabilities, strong creditor support, lock-up arrangements and expert evidence concerning foreign law supported that conclusion.
6. The court was satisfied that Mr Nelson-Smith had been validly appointed as foreign representative of each Plan Company and declared and recorded that appointment.

At a convening hearing on 20 October 2023, the court ordered meetings of the four creditor classes and gave reasons in [2023] EWHC 2754 (Ch). The present judgment concerned sanction of the plans.