Standard Profil Automotive GmbH, Re

The court considered an application under Part 26 of the Companies Act 2006 for an order to convene a single meeting of holders of the Company's Existing Senior Notes to consider a proposed scheme of arrangement. The threshold questions at the convening hearing — jurisdiction, notice, class composition and the existence of any jurisdictional roadblocks — were addressed. The court held that (i) the English court had jurisdiction to order the meeting because the noteholders could be treated as creditors for Part 26 purposes and the governing law and jurisdiction clauses had been validly amended to English law, (ii) the notice given to Scheme Creditors was adequate in the circumstances, and (iii) a single class of Scheme Creditors was properly constituted because the legal rights to be varied were sufficiently similar and commercial variations (such as lock-up, backstop and work fees) did not materially fracture the class. The court also found no manifest roadblock to sanction, including as to international effectiveness, having regard to the expert evidence on likely recognition in Germany. The convening order was granted.

Background and parties:

• The applicant, Standard Profil Automotive GmbH (the Company), is a German holding company and the Group's principal financing entity. Its principal indebtedness included €270–275m of Existing Senior Notes (6.25% coupon, maturing 30 April 2026), a €30m Term Loan (maturing 30 September 2025 with an extension option) and a Bridge Loan of c.€43.5m (maturing 30 September 2025 with an extension option). There was also a €15m shareholder loan. The Scheme Creditors were the ultimate beneficial holders of the Existing Senior Notes.

Nature of the claim/application:

• The Company sought permission under s.896(1) of the Companies Act 2006 to convene a single meeting of creditors to consider and, if thought fit, approve a scheme of arrangement under Part 26 to implement a restructuring of the Senior Secured Debt. The restructuring involved issuance of €145m of New Super Senior Notes, reinstatement of €83m of Reinstated Senior Notes, transfer of the sponsor’s equity to new funding providers and changes to the shareholder loan arrangements.

Procedural posture and evidence:

• The application was supported by witness statements, expert valuation reports from PwC on the comparator (accelerated sale in a German insolvency) and a report on German recognition from Professor Dr Christoph Thole. A Practice Statement letter, a draft Explanatory Statement and documentation on the Lock-Up, Backstop and other commercial arrangements were provided.

Issues framed by the court:

1. Jurisdiction to convene meetings under Part 26 and whether the applicant fell within s.895;
2. Adequacy and timing of notice of the convening hearing;
3. Whether the Scheme Creditors formed a single class or required multiple classes (class composition), taking account of lock-up, backstop, work fees and other commercial arrangements; and
4. Whether there were any roadblocks to sanction, including as to international effectiveness/recognition in Germany.

Court's reasoning:

• Jurisdiction: The court accepted that the noteholders could become creditors for Part 26 purposes (including by becoming registered holders) and that a foreign company is a company for Part 26 where liable to winding up under the Insolvency Act 1986. The court concluded there was no jurisdictional objection.
• Notice: Having regard to the Practice Statement, the complexity of the transaction and the sophistication of creditors, the court was satisfied that the notice given (Practice Statement Letter and subsequent documents distributed via the Scheme website and clearing systems) was adequate.
• Class composition: Applying the Hawk principle, the court analysed (i) legal rights being released/varied and (ii) new rights conferred. The Existing Senior Noteholders held identical pari passu rights; the Scheme would ratably provide Reinstated Senior Notes and options to participate in New Funding. The court concluded that lock-up fees, backstop shares, a modest work fee and reimbursement of AHC advisers’ costs did not create material differences in legal rights that would fracture the class, and a single Scheme Meeting was appropriate.
• Roadblocks and international recognition: The court identified no manifest roadblocks at the convening stage. It accepted that international recognition and related questions would fall to be considered at sanction, but noted the Professor Thole report and precedents suggesting a reasonable prospect of recognition in Germany.

Disposition: The court granted the convening order and directed discussion of practical arrangements and the form of order.

The Court granted the application to convene a single meeting of the Scheme Creditors under s.896(1) of the Companies Act 2006. The court concluded that it had jurisdiction, adequate notice had been given, the proposed single class of Existing Senior Note holders was properly constituted because the legal rights to be varied were sufficiently similar and the commercial arrangements (lock-up, backstop, work fee, adviser cost reimbursements and shareholders’ agreement governance rights) did not materially fracture the class, and there were no manifest roadblocks (including as to likely international recognition) at the convening stage. Accordingly the convening order was made and practical arrangements were to be finalised.