Chandlers Building Supplies Holdings Limited & Ors, Re

The court considered an application for permission to convene creditor meetings to consider 13 inter-conditional restructuring plans under Part 26A of the Companies Act 2006. The judge held that the Part 26A threshold conditions in section 901 (Conditions A and B) were satisfied because the Plan Companies were in manifest financial difficulty and the proposed compromises were aimed at mitigating those difficulties. The convening hearing role is limited and does not determine fairness for sanction; the matters for this stage included adequacy of notice, jurisdiction, threshold conditions, class composition and any obvious roadblocks.

The court was satisfied that notice requirements had been met, that there was jurisdiction, and that no obvious roadblocks were evident. The court accepted the proposed class structure: a single class of secured creditors, five distinct landlord classes reflecting differences in lease rights and proposed treatment, a class of business rates creditors and a class of general unsecured creditors. The court accepted that a plan may alter financial obligations under leases (including reducing rent) provided landlords retain the right to terminate, and it accepted the ricochet/deed of contribution mechanism for releasing secured claims for present purposes. Directions were given to convene the meetings and a timetable for voting and a sanction hearing was set.

This was a first instance convening hearing brought on behalf of 13 Plan Companies in the Turbo Group seeking permission to convene meetings of creditors to consider 13 inter-conditional restructuring plans under Part 26A of the Companies Act 2006.

• Background: The Turbo Group operates a large builders merchants business (some 176 branches and 210 leases) and faced severe financial distress after trading losses and liquidity pressure. Forecasts showed the group would run out of cash in early August 2025 absent a restructuring. The Plans are part of a wider restructuring and recapitalisation involving secured lenders and equity holders.
• Relief sought: Permission to convene creditor meetings to consider the Plans which proposed (i) substantial release and amendment/extension of secured debt, (ii) compromise of landlord liabilities across a detailed categorisation of leases, and (iii) compromise of certain business rates and other unsecured liabilities; ordinary trade creditors were not to be compromised.
• Issues framed by the court: adequacy of notice, court jurisdiction under Part 26A, satisfaction of section 901 threshold conditions (Conditions A and B), the correct composition of creditor classes, whether any obvious roadblocks to sanction existed, and the directions/timetable for convening meetings.
• Court reasoning and findings: The judge found that: the Practice Statement letter and dissemination by an information agent provided adequate notice; jurisdiction was satisfied (all companies incorporated in England and Wales); Condition A (financial difficulties affecting going concern) and Condition B (a proposed compromise to mitigate those difficulties) were met; no roadblocks were evident on the papers; and the proposed classes were appropriate after applying established authorities on class composition (including the need to confine classes to those with not materially dissimilar rights and to carry out a comparative exercise against the relevant alternative). The court explained that it cannot alter proprietary rights but can alter financial obligations under leases so long as landlords retain termination rights; it accepted for present purposes the deed of contribution/ricochet mechanism to ensure release of secured claims. The judge approved the proposed classes (one secured class, five landlord classes, one business rates class, one general unsecured class), gave directions for convening the meetings and set a timetable including a sanction hearing in early July.

The convening hearing therefore authorised the proposed process to summon and hold the creditor meetings; issues of the fairness and sanction of the Plans remain for the sanction hearing.

At first instance the court granted permission to convene the proposed creditor meetings to consider the 13 inter-conditional Part 26A restructuring plans. The judge concluded that the convening-stage requirements were met: adequate notice had been given; the court had jurisdiction; section 901 Conditions A and B were satisfied; no obvious roadblocks were shown; and the proposed creditor class composition (a secured creditor class, five landlord classes, a business rates class and a general unsecured creditor class) was appropriate. The court directed that the meetings be summoned in accordance with the proposed timetable and listed a sanction hearing in July 2025. The court emphasised that fairness and sanctioning issues will be for the subsequent sanction hearing.