Speciality Steel UK Limited, Re

The court granted the Plan Company's application to convene six class meetings to consider a proposed Restructuring Plan under Part 26A of the Companies Act 2006, having found that the company is within the court's jurisdiction and that the statutory threshold conditions (condition A and condition B in section 901A) were satisfied. The judge emphasised the established principle that the convening stage is not the forum to resolve the merits of the Restructuring Plan or fairness issues, which are reserved for the sanction hearing, but checked and approved the proposed class composition and the form of the Explanatory Statement as adequate for the convening purpose.

The court recognised the substantial concerns of the Greensill Creditors about the original proposals (including loss of security and perceived disproportionate benefit to shareholders) and noted subsequent negotiations and proposed amendments which go some way to address those concerns; the Greensill Creditors did not seek to prevent the meetings being convened. Because further amendments to the Plan and explanatory materials remained possible, the judge made an exceptional order permitting the convening to proceed on a modified timetable and with safeguards, and fixed provisional directions and a sanction hearing window in February 2025.

Background and parties: The applicant, Specialty Steel UK Limited (the Plan Company), sought an order under Part 26A of the Companies Act 2006 to convene six meetings of classes of its creditors (the Plan Creditors) to consider and, if thought fit, approve a Restructuring Plan intended to rescue the business. An important constituency, the Greensill Creditors, had strongly criticised the Plan as originally presented. Counsel for the Plan Company and for the Greensill Creditors appeared; other creditor constituencies and advisers are described in the judgment.

Nature of the application: An application to convene creditor class meetings under Part 26A so that creditors may consider a proposed Restructuring Plan. The issues included whether the court had jurisdiction, whether statutory threshold conditions under section 901A were met, whether the proposed class composition was appropriate, whether the Explanatory Statement was adequate for convening purposes, and whether the court should permit convening where further amendments to the Plan and explanatory documents were likely.

Issues framed by the court:

• Jurisdiction and statutory thresholds under section 901A(1)–(3) (condition A and condition B).
• Proper composition of creditor classes and whether any class might be fractured by differing interests.
• Adequacy of the Explanatory Statement and the Court's role at the convening stage (not to decide merits or fairness of the plan).
• Whether to permit an exception to the ordinary practice of only allowing substantially final documents to go to meetings, given ongoing negotiations with major creditors (notably Greensill) and a risk that allowing the process to stop would foreclose any prospect of rescue.

Court's reasoning and findings: The judge accepted that the Plan Company is an English company within the meaning of section 901A(1) and that it is in financial difficulties so that condition A is satisfied. He was satisfied that condition B — that the purpose of the compromise or arrangement is to eliminate, reduce or mitigate the effects of those difficulties — was met in principle because the Plan, if successful, would enable the company to continue as a going concern and produce better outcomes for creditors than immediate liquidation.

The proposed six classes (TCFL; Greensill Creditors; critical trade creditors; HMRC; Other Plan Creditors; and GFG Alliance creditors) were found to mirror the genuine differences of interest and to be suitable for class voting. The Explanatory Statement as revised was adequate for convening purposes. The judge reiterated the fundamental rule that the convening hearing is not the stage to determine merits or fairness of the Plan, which is reserved to the sanction hearing, but recognised exceptional circumstances here: ongoing negotiations with the Greensill Creditors and a risk that refusing to permit convening would precipitate liquidation and the loss of the restructuring prospect.

Accordingly, in an exception to ordinary practice the court authorised the convening of the six meetings on a modified timetable, subject to safeguards that changes materially affecting class composition would require restoration for further directions. The court fixed provisional directions, voting timelines and a sanction hearing window in the week beginning 17 February 2025 (two days allocated, with flexibility). The judge warned that amendments after meetings are difficult to accommodate and emphasised the importance of creditor engagement.

Subsidiary findings: The court described the principal creditor groups and the proposed treatment under the Plan (eg full payment to first-ranking fixed charge holder TCFL by instalments; substantial write-off and revised security/entitlements proposed for Greensill Creditors; treatment of HMRC, critical creditors, excluded creditors and other unsecured creditors; release of certain intra-group claims). The court noted HMRC's equivocal position and that Greensill remained unconvinced but no longer opposed convening. The judge criticised the Plan Company's earlier lack of engagement with Greensill.

The court ordered that the six classes of creditor meetings be convened (permission granted) and approved the form and timetabling of notices and the Explanatory Statement for convening purposes. The judge held that jurisdiction and the statutory threshold conditions in section 901A were satisfied, that the proposed class composition was appropriate, and that exceptional circumstances justified permitting convening despite the possibility of further amendments to the Plan. Directions were given for voting deadlines and for a provisional sanction hearing in February 2025. The court stressed that merits and fairness questions are for the sanction stage and warned that substantial amendments after creditor meetings will normally require restoration.