Project Verona Limited, Re

The court was asked to sanction a restructuring plan under Part 26A of the Companies Act 2006. The judge found that the convening order and voting procedures had been complied with, that the correct class composition was adopted and that the statutory cross-class cram-down conditions in section 901G were satisfied. The "relevant alternative" was found most likely to be a pre-pack administration in which unsecured creditors would receive nothing; by contrast the Plan offered unsecured creditors around 4.17p in the pound, a Restructuring Surplus Fund and a contingent payment linked to EBITDA performance.

The court performed procedural and substantive checks: it accepted the Plan Company’s uncontested evidence (notably from Mr Plant and FRP Advisory) on the relevant alternative and cash constraints, concluded there was no jurisdictional obstacle to sanction (including in relation to releases of underlying liabilities), and held that the assenting class votes were properly obtained and rational. Horizontal and vertical fairness inquiries did not disclose unfair sharing of the restructuring benefits, and no creditor mounted an oral challenge at sanction. The Plan was therefore sanctioned.

Background and nature of the application. This is a first instance application by Project Verona Limited for sanction of a Restructuring Plan under Part 26A of the Companies Act 2006. A prior convening judgment ([2024] EWHC 1261 (Ch)) had authorised convening meetings of seven creditor classes. Following those meetings the Secured Creditor and certain landlord classes assented, while rating authorities and non-critical creditors did not. The Company sought sanction by way of a cross-class cram down under section 901G.

Key facts and evidence.

• The Plan included a distribution to unsecured Plan Creditors of around 4.17p in the pound, a Restructuring Surplus Fund and a provision that 50% of any EBITDA uplift up to 31 December 2024 would be shared with (most) creditor classes.
• Mr Plant (chief executive of Tasty plc and related entities) provided evidence that, on FRP Advisory’s advice, the most likely "relevant alternative" if the Plan were not sanctioned was a pre-pack administration in which Category A sites would be sold out and unsecured creditors would receive nothing.
• Voting showed approval by the Secured Creditor and by Category B and C Landlords (by the statutory majorities at their meetings), but several classes did not vote or did not form a meeting under Re Altitude Scaffolding.

Issues framed by the court.

• What is the "relevant alternative" for the purpose of s901G(4)?
• Have the statutory steps, notices and class compositions been correctly followed?
• Is there jurisdiction to sanction the Plan (including as to releases and the moratorium)?
• Do Conditions A and B of s901G(3) and (4) and the court’s fairness and rationality checks permit sanction (horizontal and vertical comparisons; benefits to non‑participating stakeholders; turnout and representativeness)?

Court’s reasoning and conclusions. The judge accepted the Plan Company’s unchallenged evidence that the relevant alternative was an administration with a pre-pack sale of Category A sites. He concluded that the convening order had been complied with, that class composition was appropriate, and that there were no jurisdictional objections to sanctioning the Plan (including in relation to releases and deprivation of proprietary rights). Condition A was satisfied because, on the accepted formulation of the relevant alternative, dissenting unsecured classes would not be worse off than under the Plan. Condition B was satisfied because the Secured Creditor (who would have received in the relevant alternative) voted in favour. The court considered low turnout to be largely apathy rather than inability to participate and accepted the chair’s admission of some late proxies. A "rationality check" was passed and both horizontal and vertical fairness comparisons did not disclose unfairness; the judge also considered the benefit accruing to shareholders and the Secured Creditor but found no practical basis before the court to withhold sanction. No creditor attended to challenge the Company’s case. Given these findings the judge sanctioned the Plan.

Procedural note: the judge relied on authorities addressing the definition of the relevant alternative, deference to directors’ assessments supported by expert advisers, and tests for turnout, rationality and fairness in sanction hearings.

The court sanctioned the Restructuring Plan. The judge reasoned that (i) the statutory requirements for convening and voting had been met, (ii) the correct "relevant alternative" for s901G purposes was a pre-pack administration in which unsecured creditors would receive nothing, (iii) Conditions A and B of section 901G were satisfied, (iv) there was no jurisdictional obstacle to sanction, and (v) the votes of the assenting classes were rational and the redistribution of restructuring benefits was not unfair. No creditor attended to challenge these conclusions and the Plan was therefore approved.