Re Tele Columbus AG

The court acceded to an application under Part 26 of the Companies Act 2006 for an order convening a single creditors' meeting to consider a scheme of arrangement proposed by Tele Columbus AG. The judge confined the convening-stage inquiry to the matters appropriate at that stage: adequacy of notice, class composition, directions for the meeting and explanatory documentation, and whether any jurisdictional road‑block was apparent. The court found the notice period and prior consultation (including a lock‑up agreement) to be sufficient given the scheme complexity and urgency; it concluded that a single class of Scheme Creditors was appropriate because the legal rights to be varied were sufficiently similar (pari passu ranking, common security and harmonised maturities and covenants); and it held that the lock‑up agreement and modest early/late consent fees did not fracture the class. The court also found no obvious jurisdictional road‑block at the convening stage, accepting that the change to English governing law and available expert and precedent material provided a realistic prospect of international recognition (notably in Germany). Directions for timing, notice, remote conduct of the meeting and the proposed timetable were approved.

Background and parties. Tele Columbus AG (the Company), a German public company with no UK business or presence, is the holding and central financing vehicle for a German fibre‑optic group. The Company carries two principal financial liabilities: €650 million senior secured notes and a c.€1.38 billion senior facilities agreement (c.€462 million outstanding). Creditors are secured and governed by an intercreditor agreement. Short‑term liquidity pressure and commercial challenges meant the Company proposed a Transaction to extend maturities and amend terms of the Notes and SFA, together with an equity commitment of €300 million by the majority owner and affiliates, implemented by a scheme of arrangement under Part 26 CA 2006.

Nature of the application. The Company applied for an order convening a single meeting of creditors to consider and, if thought fit, approve the Scheme that would enable amendments to the finance documents, extension of maturities to 1 January 2029, increased interest and exit fees, tightened covenants and related intercreditor amendments, and the Equity Commitment.

Issues for decision at convening stage. The court identified the limited scope at convening: (i) adequacy of notification, (ii) whether a single creditors' class is appropriate, (iii) directions on notice, timing and conduct of the meeting (including remote attendance), (iv) adequacy of the explanatory statement, and (v) whether any jurisdictional road‑block appears.

Court’s analysis and reasoning.

• Notice. The Practice Statement Letter was issued on 29 December 2023 for a hearing on 17 January 2024. The court considered the factors set out in Re NN2 NewCo Ltd (complexity, prior consultation and urgency) and concluded that notice was adequate given prior consultation (lock‑up circulated 22 November 2023), high participation in the lock‑up and the urgency arising from liquidity forecasts.
• Class composition. Applying the established test (similarity of legal rights), the judge found that Noteholders and lenders held rights that were not so dissimilar as to require separate classes: obligations rank pari passu under the intercreditor agreement, both sets of claims share the same security and guarantees, maturities would be harmonised under the Scheme, and economic outcomes were closely aligned (with mechanisms such as SSN/SFA elections to minimise differences). The lock‑up agreement and modest Early/Late Consent Fees were held not to fracture the class because (i) acceding creditors had equal opportunity to participate, (ii) the fees were de minimis relative to recoveries and unlikely to sway commercial voting, and (iii) the Scheme affects all creditors similarly.
• Directions, explanatory materials and remote meeting. The proposed timetable and directions (including remote meeting arrangements) were proportionate and designed to enable implementation in time to meet urgent funding needs. The explanatory statement did not contain manifest deficiencies on a superficial reading and transmission arrangements were acceptable.
• Jurisdictional issues and recognition. The court examined whether there was any manifest jurisdictional impediment to convening: although the Company is German and has no UK presence, the change to English governing law of the Notes (together with the English‑governed SFA and Intercreditor Agreement) was a sufficient connection at this stage. The judge noted authorities (including Re Drax and Re Apcoa) and expert material filed on recognition in Germany and accepted there was a realistic prospect that the Scheme would have substantial effect internationally and not be acted on in vain. The court reserved fuller consideration of these matters for the sanction stage.

Result. For these reasons the court made the convening order sought, approving a single creditors' meeting and the proposed directions and timetable.

The court granted the application to convene a single meeting of creditors to consider and, if thought fit, approve the proposed scheme of arrangement under Part 26 CA 2006. The judge concluded at the convening stage that notice was adequate, a single class of Scheme Creditors was appropriate, the explanatory statement and proposed directions were acceptable, and no manifest jurisdictional road‑block was apparent; the court reserved fuller consideration of recognition and substance for the sanction hearing.