HSE Finance SÀRL, Re

The court granted the Scheme Company’s Part 26 application to convene a single meeting of the Existing Noteholders to consider a scheme of arrangement under Part 26 of the Companies Act 2006. The judge confined the convening-stage enquiry to (i) adequacy of notice, (ii) any plainly insuperable jurisdictional objection, (iii) class composition, and (iv) the form of the explanatory materials. On the evidence the Practice Statement Letter and explanatory materials were adequate, there were no obvious jurisdictional impediments to an English-law governed scheme (supported by expert evidence on recognition), and the Existing Noteholders were properly treated as a single class despite limited differences in coupon and payment dates between the fixed-rate and floating-rate cohorts. The limited difference arising from interest payment dates was regarded as immaterial in the Comparator scenario (a director-led quick sale or insolvency) and did not make consultation in common interest impossible. The court therefore directed that a single meeting of Existing Noteholders be convened, and made directions for the timetable and documentation leading to the sanction hearing.

Background and nature of the application

The Scheme Company, an intermediate Luxembourg holding company that issues two series of senior secured notes, applied by Part 8 claim for an order to convene a meeting of certain creditors (the Existing Noteholders) to consider a scheme of arrangement under Part 26 of the Companies Act 2006. The Scheme forms part of a wider restructuring of the HSE Groups indebtedness. No Event of Default had occurred on the Existing Notes at the date of the convening hearing.

Relief sought

• An order to convene a single creditor meeting of Existing Noteholders to consider and, if thought fit, approve the Scheme under Part 26 CA 2006;
• associated directions as to timetable, notice and documentation (including an explanatory statement under s.897 CA 2006), and permission for the Scheme Company to execute implementation documents if the Scheme is approved.

Issues framed by the Court at the convening stage

• Whether adequate notice of the convening hearing and the proposed meeting had been given to affected creditors;
• whether there were any plainly insuperable objections to the Courts jurisdiction or other factors making the exercise of the discretion to sanction the Scheme impossible;
• how the meeting(s) should be constituted, in particular whether there should be one class or multiple classes of Existing Noteholders (class composition); and
• whether the explanatory statement and other materials were in appropriate form for circulating to creditors at the convening stage.

Facts and evidential matters of particular relevance

• The Existing Notes comprise 80m fixed-rate notes and 30m floating-rate notes (aggregate principal 330m; accrued interest c.10.55m). The Existing Notes had their governing law changed to English law on 14 April 2025; expert evidence addressed recognition and the validity of that change.
• No Event of Default had occurred; the Group had trading and liquidity difficulties and the directors considered there was no reasonable prospect of repaying the Existing Notes at par by October 2026.
• The Scheme Company relied on a comparator of a director-led quick sale of the business (within c. two months) or, alternatively, an insolvency sale; independent advisers prepared a Comparator Report and a Valuation Report showing materially higher recoveries under the Scheme than under the Comparator.
• An Ad Hoc Group was formed to develop the proposal; the membership and percentage holdings were corrected during the proceedings (initially misstated as 73%, revised to 53.52%). A Lock-Up Agreement had been signed by parties with combined acceded support of c.89% (83% evidenced) by the convening hearing.
• The Scheme would effect exchange of Existing Notes for new senior secured notes, new PIK notes stapled to contingent value rights (CVRs), with releases of guarantor and related claims and an implementation deed and deed of release to be executed if the Scheme is approved.

Courts reasoning and conclusions

• Notice: 21 days' circulation of the Practice Statement Letter to sophisticated noteholders and to the clearing systems was adequate in the circumstances.
• Jurisdiction and recognition: on the prima facie evidence (including expert reports on New York, German and Luxembourg law), there was a sufficient connection with England and Wales and prospects of recognition in relevant jurisdictions to justify proceeding to convene meetings; no obvious jurisdictional bar was identified at the convening stage.
• Class composition: the court applied the established two-stage test (are rights materially dissimilar; if so, would differences make consultation in common interest impossible). It recognised a modest difference arising from coupon amounts and payment dates between fixed and floating notes (timing of interest payments might advantage one cohort marginally in the Comparator), but concluded that, given the comparator (director-led quick sale or insolvency) the monetary effect was immaterial and there was "more to unite than to divide"; therefore a single class meeting was appropriate at this stage.
• Other matters: collateral arrangements (advisers fees, lock-ups, RCF and leases) were considered and, on the evidence, did not create a "class within a class" or otherwise justify refusing the convening order. The exclusion of certain creditors (RCF, leases) was commercially justified for present purposes.

Result

The court acceded to the application to convene a single meeting of Existing Noteholders and made directions as to notice, timetable and documents leading to the sanction hearing. The substantive fairness of the Scheme remains for determination at the sanction stage.

The court acceded to the Scheme Companys application and ordered that a single meeting of the Existing Noteholders be convened with directions as to timetable and disclosure. The judge found that (i) notice was adequate, (ii) there were no plainly insuperable jurisdictional objections on the material before the court, and (iii) on the convening-stage analysis the fixed-rate and floating-rate noteholders can properly be treated as a single class because any difference arising from interest rates/payment dates was immaterial in the relevant comparator and did not prevent consultation in their common interest. The sanction hearing remains to consider the merits and fairness of the Scheme.