Project Lietzenburger Straße Holdco S.À.R.L., Re

The court exercised its broad discretion to sanction an amended Part 26A plan (the "Amended Plan") under section 901F of the Companies Act 2006. The judge applied the four questions identified by Snowden J in Re KCA Deutag UK Finance Plc [2020] EWHC 2977 concerning statutory compliance, fair representation and bona fides of the majority, the "intelligent and honest creditor" test and the presence of any blot or defect. The court found that the statutory requirements had been satisfied, the convening order had been complied with, Senior Creditors were fairly represented and voted in a bona fide manner (97.3% in favour on a 100% turnout), an intelligent and honest creditor could reasonably approve the Amended Plan, and there were no blots or defects. The Amended Plan differed from the earlier Plan only by providing €200,000 to Subordinated Creditors, who had not been represented at the New Plan Meeting pursuant to the court's order under s901C(4). Section 901G was not applicable to the Amended Plan.

Background and parties: This short judgment follows a judgment handed down on 4 March 2024. The Plan Company sought sanction of an Amended Plan under the Companies Act 2006. The New Plan Meeting, convened by order of the court, involved only Senior Creditors because the court had ordered under s901 C(4) that Subordinated Creditors not be represented at that meeting.

Nature of application: The application was for the court to exercise its discretion to sanction the Amended Plan under s901F. The Amended Plan differs from the previously considered Plan only by a provision to pay €200,000 to Subordinated Creditors.

Issues framed by the court:

• Whether statutory requirements and the convening order had been complied with;
• Whether the class (Senior Creditors) was fairly represented and whether the majority had acted bona fide and for proper purposes;
• Whether the Amended Plan was one which an intelligent and honest creditor might reasonably approve;
• Whether there was any other blot or defect, including issues of forum shopping and sufficient connection to the United Kingdom.

Court's reasoning and findings: The judge applied the four Snowden J questions from Re KCA Deutag UK Finance Plc [2020] EWHC 2977. Witness evidence established compliance with the convening order. At the New Plan Meeting 100% of Senior Creditors were represented and 97.3% by value voted in favour. The court remained satisfied that Senior Creditors were fairly represented, voted in a bona fide manner and were not coerced. The court concluded that an intelligent and honest Senior Creditor could reasonably approve the Amended Plan and that there were no blots or defects; earlier conclusions on forum shopping and sufficient UK connection, as set out in the 4 March 2024 Judgment, applied equally. Section 901F authorised sanction because only Senior Creditors were summoned and approved the Plan; section 901G did not apply. Costs applications by several parties were noted but not determined because the parties had agreed costs between themselves.

The court sanctioned the Amended Plan under section 901F of the Companies Act 2006. The judge exercised his discretion after finding statutory requirements were met, the convening order complied with, Senior Creditors were fairly represented and voted in a bona fide manner (97.3% in favour on a 100% turnout), an intelligent and honest creditor could reasonably approve the Amended Plan, and there were no blots or defects. Section 901G was not applicable.

The judgment follows an earlier Judgment handed down by the same judge on 4 March 2024 in which the court ordered a further plan meeting to be convened. Pursuant to that order, and to the court's order under s901 C(4) of the Companies Act 2006, Subordinated Creditors were not represented at the New Plan Meeting. The New Plan Meeting took place and Senior Creditors approved the Amended Plan (97.3% by value on a 100% turnout), leading to this sanction order dated 7 March 2024.