PlusHolding GmbH, Re

The court sanctioned a revised scheme of arrangement under Part 26 of the Companies Act 2006 after finding that statutory requirements had been complied with and that the modifications to the scheme were not so different as to amount to a fundamentally different scheme. The judge held that class composition and fair representation remained appropriate, the explanatory materials were adequate (including a supplement), and the creditor vote (100% of those attending, representing 96.12% by value) supported sanction. Material modifications included moving a €165 million PIK facility from a new Holdco/Holdco level to the Company level; the court accepted that this and consequential changes left the economic outcome for Scheme Creditors materially the same.

The court also considered international effectiveness and was satisfied the scheme would likely be recognised abroad given the English law governing the Term Facilities, submissions to English jurisdiction in the lock-up agreements, and expert evidence as to recognition in Germany. Conditions precedent existed but were expected to be satisfied in short order and did not render the sanction inappropriate.

Nature of the application: An application under Part 26 of the Companies Act 2006 for an order sanctioning a scheme of arrangement (the revised scheme) proposed by PlusHolding GmbH to implement a restructuring of borrowings provided under the Term Facilities.

Background and parties: The Company is part of a group owning and operating data centres and cloud infrastructure. The Term Facilities are senior borrowings governed by English law and due to mature in August 2024. The lenders (Scheme Creditors) include collateralised loan obligation vehicles which abstained at the scheme meeting for governance reasons. At the convened meeting, those present and voting approved the scheme, representing over 96% by value.

Relief sought: Sanction of a revised scheme which adjusted the structure of reinstated debt (notably relocating a €165 million PIK facility to the Company as unsecured and subordinated PIK) and made consequential amendments after a pre-sanction issue arose concerning a tax ruling.

Issues framed by the court:

• Whether statutory requirements (including class constitution, convening and voting procedures, and adequacy of the explanatory statement) were satisfied;
• Whether the revised scheme was "substantially the same" as the one approved at the meeting so as not to foist a different bargain on creditors;
• Whether an intelligent and honest creditor might reasonably approve the scheme (the comparator analysis);
• Whether there were any blot or defect, including unacceptable conditions precedent; and
• Whether the scheme was likely to be effective internationally.

Reasoning and conclusion: The court concluded statutory requirements were met: class composition was appropriate, the explanatory statement (with supplement) was adequate for sophisticated financial creditors, and the meeting was properly conducted. The judge applied authorities on modifications to schemes and was satisfied the revised scheme was commercially and economically the same as that voted upon; creditor support (including letters confirming consent to the revision and lock-up agreements) reinforced that conclusion. The comparator evidence suggested the scheme would produce a better return than the likely distressed enforcement alternative. Conditions precedent did not give third parties a discretionary veto and were likely to be satisfied shortly, so sanction would not be acting in vain. On international effectiveness, English governing law and jurisdiction clauses in the facilities and lock-up agreements, together with expert evidence on German recognition, provided sufficient assurance. The court therefore approved and sanctioned the revised scheme.

Application granted. The court approved and sanctioned the revised Part 26 scheme because the statutory requirements had been satisfied, the modifications left the economic outcome for Scheme Creditors materially unchanged so the scheme remained substantially the same as that approved at the creditor meeting, there was fair representation and no blot or defect, and the scheme was likely to be effective internationally; outstanding conditions precedent were not fatal to sanction.