Poundland Limited, Re

The court granted the Plan Company permission to convene meetings of 14 classes of creditors to consider a restructuring plan under the Companies Act 2006. The court concluded that it had jurisdiction under section 901A and section 901C(1) and that the statutory conditions (Condition A and Condition B) for a Part 26A/Part 25A procedure were satisfied.

The judge applied established principles on class composition (rights in and rights out) and concluded that the proposed division of creditor classes, including multiple landlord classes, was not so materially dissimilar as to require re‑classification. The court was satisfied that the Practice Statement requirements for notification and the explanatory statement had been met in substance, although it required additional disclosure and amendments (in particular greater prominence of shareholders’ interests, explanation of a proposed management share plan and disclosure about a potential independence issue of an adviser).

The court accepted the proposal for virtual meetings, preserved the ability of any creditor to make representations at the sanction hearing where appropriate, and gave directions (including a short adjustment to the timetable) to permit the required changes to the explanatory statement.

Background and parties: Poundland Limited (the Plan Company), a large retail group with significant financial difficulties, applied to the High Court for an order convening meetings of about 862 creditors divided into 14 classes to consider a restructuring plan (the Plan). The Plan forms part of a wider restructuring tied to a change of shareholder following a sale to Peach Bidco. The Plan proposes changes to working capital facilities, conversion of unsecured loans into equity, compromise of lease liabilities across a large portfolio of stores, business rates compromises and compromises of other unsecured liabilities.

Nature of the application: The application was for a convening hearing under the Companies Act 2006 (principally invoking section 901C(1) and the Part 26A regime introduced by section 901A) and the Practice Statement governing schemes and arrangements. The relief sought was an order that meetings of creditors or classes of creditors be summoned in a manner directed by the Court.

Issues before the court: The court framed the issues as: (i) whether the Court had jurisdiction to sanction the Plan (the statutory conditions in section 901A and 901C), (ii) whether the proposed class composition of creditors was appropriate under the authorities on schemes and plans (considering "rights in" and "rights out"), (iii) whether Practice Statement requirements as to notice and adequacy of the explanatory statement had been satisfied, and (iv) whether any other matters operated as jurisdictional roadblocks to convening the meetings.

Court’s reasoning: On jurisdiction, the judge was satisfied that the Plan Company is a company for the purposes of Part 26A, that Condition A (financial difficulties affecting going concern) was made out on the evidence, and that Condition B (a compromise with creditors to mitigate those difficulties) was satisfied. On class composition, the court applied the established test (whether creditors’ rights are so dissimilar as to make consultation as a class impossible), considered relevant authorities and expert advice on the Relevant Alternative, and accepted the proposed 14 classes including multiple landlord classes as commercially coherent. The court noted but rejected concerns that the Plan Company was artificially fracturing creditor groups to facilitate cram down under section 901G, observing differences in "rights out" across landlord categories justified the divisions.

Notification and explanatory statement: The Practice Statement Letter was sent on 12 and 13 June, giving about 25–26 days’ notice. There remained a minority of creditors where delivery confirmation was absent or documents were returned, but the judge concluded the Plan Company had taken all reasonable steps and that notice was adequate given urgency. The explanatory statement was in appropriate form but required further disclosure: more prominence to shareholders’ interests and returns under different scenarios, explanation of directors’ management share plan, and disclosure of a potential independence concern regarding an adviser (Mr Maher/Teneo) involved in preparing the Plan. The court directed that these matters be addressed and preserved creditors’ rights to raise issues at the sanction meeting.

Order and practical directions: The court approved convening the virtual class meetings (subject to specified amendments and a short adjustment to the timetable), approved the proposed virtual meeting format as appropriate, and ordered that creditors retain the opportunity to make representations at sanction if they had not been able to do so at convening stage.

The application for an order convening meetings of the Plan Company’s creditors was allowed. The court held that the statutory conditions for Part 26A/Part 25A were satisfied (company status, Condition A and Condition B), the proposed classification of creditors into 14 classes was appropriate on the rights‑in/rights‑out analysis, notice and the explanatory statement were adequate in substance but required specified additional disclosure, and that virtual meetings were appropriate. The court therefore made the convening order with directions and preserved creditors’ ability to make representations at the sanction hearing.