Speciality Steel UK Limited, Re

At the convening stage of a restructuring plan application, the court should not ordinarily assess the plan’s merits or fairness. Those matters belong principally to the sanction hearing, unless a jurisdictional bar is apparent or closely approached.

The court should ordinarily require the documents considered at the convening hearing to remain substantially unchanged for the creditor meetings. An exception may be made in genuinely exceptional circumstances, particularly where continuing negotiations are necessary to preserve the company’s prospects, but the order should address the possibility of amendment. Any change affecting class numbers or constitution requires the matter to be restored immediately. Substantial amendments should generally be made before creditors vote and must be adequately explained.

Speciality Steel UK Limited applied under Part 26A of the Companies Act 2006 for orders convening six creditor meetings to consider a proposed restructuring plan.

The application had previously been adjourned after Greensill creditors challenged proposals which would have substantially written off their debts, released their security and left value with the shareholder. Revised proposals had been made, but further amendments remained possible. The court therefore had to determine whether the meetings should proceed, whether the statutory and jurisdictional conditions were met, whether the proposed classes were properly constituted, and whether the explanatory and notification arrangements were adequate.

1. The application was granted. Six meetings were directed, subject to a modified timetable and further safeguards.

2. At the convening stage, it is emphatically premature to determine the merits or fairness of the restructuring plan. Those questions ordinarily arise at the sanction hearing, when the court knows the creditors’ response and whether cram-down is required. The court may intervene earlier where a jurisdictional bar, or something approaching one, is apparent.

3. The court should ordinarily expect the explanatory statement and plan placed before the meetings to remain substantially in the form considered at the convening hearing. A convening hearing should not become a false feast. Exceptionally, continuing negotiations or urgent circumstances may justify permitting possible amendments, but the order should provide for the consequences. Any change to the number or constitution of classes requires immediate restoration of the matter.

4. The company satisfied the jurisdictional and threshold requirements. It was a company within section 901A(1) of the Companies Act 2006, was experiencing financial difficulties affecting its ability to continue as a going concern, and satisfied conditions A and B under sections 901A(2) and 901A(3).

5. The six proposed classes were appropriate. Applying the golden test confirmed in Re AGPS Bondco plc [2024] Bus LR 745 at [109]-[114], the creditors within each proposed group could consult together in pursuit of a common interest. Lock-up arrangements did not fracture the classes.

6. The explanatory statement and notice arrangements were presently adequate. The meetings were deferred to allow further negotiations and were directed to take place on 30 January 2025. The sanction hearing was provisionally fixed for the week beginning 17 February 2025.

7. The court approved the proposed direction under CPR 54D2, following Re Virgin Atlantic Airways Limited [2020] BCC 997 at [67], and emphasised the importance of notifying affected creditors outside the plan.