DSTBTD Limited, Re

In sanctioning a restructuring plan under Companies Act 2006 Part 26A, the court must identify the most likely outcome without the plan and compare it with the proposed restructuring. Where no class dissents, the court applies the scheme-of-arrangement rationality test: whether an intelligent and honest member of the class, acting in the interests of that class, might reasonably approve the plan. The court may rely on creditor votes where there has been fair representation, adequate information, sufficient time for consideration, and no oppressive conduct. A plan may be sanctioned where its commercial benefits are clear and no implementation defect exists.

DSTBTD Limited operated a digital platform introducing freelance software developers to client projects. Financial difficulties led to a proposed restructuring plan under Companies Act 2006 Part 26A. The plan provided new money, preferential payments to HMRC, a distribution to unsecured creditors, and a waiver by connected creditors of most of their claims.

The court considered the relevant alternative, jurisdiction, meeting constitution, statutory compliance, voting majorities, the reliability of the creditors’ decisions, whether the plan was in creditors’ best commercial interests, and whether any defect prevented implementation. It also dismissed an outstanding winding-up petition.

1. Relevant alternative and jurisdiction. The likely outcome without the plan was an insolvency process, probably liquidation. The company satisfied the jurisdictional requirements of section 901 A of the Companies Act 2006: it had encountered financial difficulties affecting its ability to continue as a going concern, and the plan was intended to mitigate those difficulties and prevent insolvency measures.
2. Meetings and statutory majority. The court upheld the constitution of the preferential and unsecured creditor meetings and was satisfied that the statutory requirements and convening order had been complied with. The statutory majority under section 901 F (1) had been achieved, with unanimous approval by the preferential class and 99.5% approval by unsecured creditors.
3. Reliance on creditor votes. The meetings fairly represented the relevant creditor classes. Creditors received sufficient information and time to assess the proposed returns, risks, and comparison with the relevant alternative. The meeting arrangements enabled participation and disclosed no oppression or overbearing influence by connected creditors.
4. Rationality and best interests. Applying the approach in AGPS Bondco Plc [2024] EWCA (Civ) 24 at [120], the question was whether an intelligent and honest class member, considering the interests of the class, might reasonably approve the plan. That test was satisfied because HMRC and the other unsecured creditors were expected to receive materially better returns under the plan than in liquidation or administration. Connected creditors also had a rational interest in preserving shareholder value.
5. Sanction and final order. No defect inhibited implementation. The restructuring plan was sanctioned. The winding-up petition presented by HMRC was dismissed, with no order as to costs.