Ambatovy Minerals Société Anonyme & Anor, Re

At the convening stage of a restructuring plan application, the court decides whether the statutory jurisdictional conditions are met, whether the proposed meetings are properly constituted, and whether any obvious roadblock would prevent a later sanction. Questions of fairness, merits, international recognition and the precise returns in the relevant alternative ordinarily belong to the sanction hearing.

Class composition requires comparison between the rights being varied and the rights creditors would have in the relevant insolvency alternative, together with the new rights offered by the plan. A broad, fact-sensitive approach applies. Where a substantial challenge to the relevant alternative would cause serious delay, class composition may be revisited at sanction, provided the present evidence supports convening.

Two Madagascan companies operating a nickel and cobalt mine applied under Part 26A of the Companies Act 2006 for permission to convene creditor meetings concerning proposed restructuring plans. The plans introduced new money, amended existing super-senior debt and compromised other creditor claims.

Senior and recovery financing lenders opposed the plans in principle but did not assert an obvious jurisdictional bar to convening. They reserved challenges concerning the relevant alternative, creditor recoveries, class composition, priority and fairness for any sanction hearing. The central issues were whether the statutory conditions and proposed classes were presently satisfied, and whether the meetings could be convened without determining the merits in full.

1. Permission granted. The court permitted the two creditor meetings to be convened and approved directions towards a proposed sanction hearing.
2. The companies satisfied the jurisdictional conditions in Part 26A. They were companies within section 901 A(1), being foreign companies liable to be wound up as unregistered companies under the Insolvency Act 1986 within section 901 A(4). They had encountered, or were likely to encounter, financial difficulties affecting their ability to continue as a going concern, satisfying condition A under section 901 A(2). Condition B under section 901 A(3) was also met because the plans introduced new money, involved sufficient give and take, and presently appeared to provide creditors with more than the relevant alternative.
3. Class composition was assessed by the broad, fact-sensitive test stated in AGPS Bondco plc [2024] EWCA Civ 24. The court had to compare the rights being released or varied with the rights creditors would have in the relevant insolvency proceeding, and with any new rights conferred by the plans. On the evidence presently available, the super-senior lenders could not consult with the other creditors in a common-interest class because they alone would recover in the proposed liquidation alternative. The remaining lenders could presently form one class because they were expected to receive no return in that alternative and were treated alike under the plans.
4. The lenders could reserve their challenge to the relevant alternative, recoveries and class composition for sanction. That pragmatic course avoided substantial delay and the risk of liquidation before the convening decision, without preventing a later reconsideration.
5. Adequate notice had been given. The sophisticated and represented creditors had received the Practice Statement letter 40 days before the hearing. The Explanatory Statement was adequate for present purposes, although it was not thereby approved.
6. Fairness and merits issues were reserved for sanction. Sufficient connection and international effectiveness were not determined at this stage, although no obvious roadblock appeared.