C-Retail Limited, Re

In a scheme or restructuring-plan claim, the court may order targeted disclosure where identified documents are relevant to issues that creditors or the court must determine. The applicant must establish the documents’ existence or the grounds for believing that they exist, and explain their relevance to an identified issue. Disclosure remains a discretionary case-management decision governed by the overriding objective. The court must balance creditors’ need for information against confidentiality, proportionality, equality of treatment and the need to progress the statutory process. Disclosure should address the proposal actually made, including whether losses and benefits are fairly apportioned. It should not become an inquiry into better alternative plans or burdensome searches for granular material that does not bear on the issues for the sanction hearing.

C-Retail Limited applied for an order convening creditor meetings to consider a restructuring plan under Part 26A of the Companies Act 2006. Prudential Assurance Company Limited, the landlord of the Plan Company’s Oxford Street premises, informally sought disclosure of documents concerning cash-flow forecasts, estimated recoveries and the group’s target operating model. The parties agreed much of the requested disclosure, but disputed the scope of the remaining requests.

The court considered the procedural route for disclosure in a Part 8 scheme or plan claim, the statutory and procedural principles governing specific disclosure and inspection, and whether the requested documents were relevant and proportionate.

1. Application and procedural route. Prudential’s informal application was treated as an application for disclosure arising in a Part 8 claim. Sir Alastair Norris observed that a Part 23 application notice should normally be used because it identifies the source of jurisdiction and focuses the court on the principles governing its exercise.
2. Applicable disclosure powers. Practice Direction 57AD did not apply to Part 8 claims by virtue of paragraph 1.4(7). The court therefore relied on the CPR. Written evidence accompanying a claim form under CPR 8.5(1) will ordinarily exhibit the material documents, but further disclosure may be ordered where a creditor reasonably requires documents that could not sensibly be placed in the public domain.
3. Under CPR 31.14, the court may order inspection of a document mentioned in a witness statement. Following Quilter v Heatley (1883) 28 Ch.D. 42, the burden lies on the claimant to explain why inspection should not occur. Under CPR 31.12, an application for specific disclosure and inspection of identified documents should be supported by evidence of the source of, or grounds for believing in, the documents’ existence and of their relevance to an identified issue.
4. Discretion and relevant considerations. The discretion is governed by the overriding objective. In schemes and restructuring plans, relevant considerations include information reasonably necessary for creditors to decide whether the proposal is in their interests, whether losses are appropriately allocated and whether value is fairly apportioned; even-handed provision of information; the fact that the sanction hearing examines the proposal described in the explanatory statement rather than alternative proposals; the statutory question of whether an honest creditor acting in its own interests might reasonably approve the proposal; and the need to avoid disproportionate disruption to a financially distressed company’s statutory process.
5. The court ordered production of the full Newmark HDH report because it was referred to in evidence, materially informed estimated recoveries and might bear on class composition. Confidentiality was adequately protected by the existing confidentiality ring. It ordered production of the target operating model if a further document existed, but not the underlying calculations and assumptions, which had not been linked to a precise issue and did not materially bear on the sanction questions. The disclosure application was therefore granted in part.