Argo Blockchain Plc, Re

At a convening hearing for a restructuring plan, the court must address jurisdictional gateways, class composition, notice and any apparent roadblock or blot that could make sanction futile. It does not decide the fairness or allocation of restructuring benefits, which are matters for the sanction hearing.

For class composition, the relevant comparison is between members’ or creditors’ rights against the company, including rights created by the plan. Differences in interests, including interests held through nominees or depositories, do not necessarily justify separate classes. The question is whether the differences in rights are so dissimilar that consultation in a common interest is impossible.

Argo Blockchain plc, an English cryptocurrency-mining company facing acute financial distress and a threatened loss of its NASDAQ listing, applied for orders convening meetings under Part 26A of the Companies Act 2006.

The proposed plan compromised secured funding provided by Growler Mining Tuscaloosa LLC and unsecured notes, while diluting existing shareholders and providing new equity and assets. The court considered whether the statutory gateways were satisfied, whether Growler, the noteholders and shareholders should form three separate classes, whether the plan contained any roadblock or blot, and whether notice and meeting arrangements were adequate.

1. Jurisdictional gateways. The company was liable to be wound up under the Insolvency Act 1986 and therefore fell within Part 26A. The noteholders’ ultimate beneficial owners could presently be treated as creditors because they had rights under the indenture to definitise their interests. Registered shareholders, rather than beneficial ADR or retail holders, were the relevant members. Conditions A and B in section 901A of the Companies Act 2006 were satisfied: the company faced financial difficulties affecting its ability to trade as a going concern, and the plan involved sufficient give and take and was intended to mitigate those difficulties.
2. Class composition. The court followed the established scheme principles. The three proposed classes—Growler, the noteholders and the shareholders—were justified because their rights under the plan and in the relevant alternative were materially different. Shareholders and noteholders should not be combined merely because the noteholders’ estimated recovery in the relevant alternative was small. Beneficial interests held through a depository did not justify a separate shareholder class because they concerned interests rather than rights against the company. The proposed three meetings were therefore directed.
3. Roadblocks and practical matters. The excluded liabilities were acceptable if carefully defined. The evidence showed that recognition of the plan in New York was sufficiently likely to avoid the court acting in vain. The proposed reliance on section 3(a)(10) of the US Securities Act 1933 did not presently require further expert evidence. The possibility of a Rule 9 waiver and continued NASDAQ compliance was not presently a roadblock, though both matters could require consideration at sanction.
4. Notice and meeting arrangements. The practice statement letter had been circulated sufficiently. Directions were given for derivative-interest voting, separate recording of such votes, expert evidence under Part 35 of the CPR, and arrangements ensuring that the proposed meetings constituted meetings or, if technically invalid, were treated as dissenting classes.
5. The court ordered the convening of the three class meetings. It declined at this stage to grant a declaration approving the appointment of a foreign representative.