OutsideClinic Ltd (The Companies Act 2006), Re

The company sought a convening order under section 901C of the Companies Act 2006 to summon creditors to vote on a restructuring plan under Part 26A. The court was satisfied that it had jurisdiction, that the company met threshold condition A (it was in financial difficulty and likely to cease trading imminently) and condition B (a compromise or arrangement was proposed to mitigate those difficulties), and that the explanatory statement and notices were adequate.

The court determined that seven creditor classes should be separately convened: the secured creditor; HM Revenue & Customs as a secondary preferential creditor; creditors with retention of title; the Swindon Landlord; shop landlords; the energy or "Onerous Contract Creditor"; and general unsecured creditors. The convening order was made, with meetings set for 17 and 18 March and a sanction hearing listed for 27–28 March, subject to a timetable for exchange of any expert evidence by HMRC.

Background and parties: OutsideClinic Ltd (the Company), a long-established provider of in‑home audiology and optometry services, applied for a convening order under section 901C of the Companies Act 2006 in order to summon meetings of specified creditor classes to vote on a proposed restructuring plan under Part 26A. The Plan proposed write‑offs, new equity, new money from existing shareholders and varied treatment of different creditor groups. The application was heard in the Insolvency and Companies List (Companies Court) as a first instance convening hearing.

Nature of the application: The Company sought an order under section 901C to convene meetings of affected creditors so that the Plan might be approved and, if necessary, later sanctioned by the Court under the statutory Part 26A procedure (which can permit cross‑class cram down).

Issues framed: (i) adequacy of notice of the convening hearing; (ii) jurisdiction; (iii) whether threshold conditions A and B under the Companies Act 2006 were met; (iv) proper class composition for voting; (v) adequacy of the explanatory statement; and (vi) adequacy of the proposed notice and timetable for the creditor meetings and sanction hearing.

Facts and findings: The Company adduced evidence that it was balance‑sheet insolvent, facing cashflow pressures and likely to cease trading from about 4 April. The court accepted jurisdictional competence. On threshold condition A the court accepted the Company was in financial difficulty affecting its ability to continue as a going concern; on condition B the court accepted that a compromise or arrangement had been proposed with the purpose of mitigating those difficulties. The court found seven distinct creditor classes for voting purposes, on the basis of differing contractual and proprietary rights and the different practical consequences of the Plan for each group. The explanatory statement, albeit lengthy, was held adequate to enable creditors to make an informed decision. Adequate notice had been given of the convening hearing and the meetings and sanction hearing were re‑timetabled, with a direction permitting HMRC to file expert evidence by 21 March if it wished.

Reasoning and order: Having concluded the statutory conditions and practical requirements were met, the court made the convening order sought, directing separate meetings for each of the seven classes, fixing meeting dates (17 and 18 March) and listing a sanction hearing for 27–28 March, with directions about exchange of evidence. The court’s decision turned on statutory compliance (Part 26A and section 901C), sufficiency of notice and information, and proper identification of classes.

The Court made the convening order sought. It concluded it had jurisdiction, that threshold conditions A and B under Part 26A of the Companies Act 2006 were satisfied, that seven distinct creditor classes should be separately convened, and that the explanatory statement and notices were adequate. The court fixed dates for creditor meetings and for the sanction hearing and directed a timetable for any expert evidence from HMRC.