Argo Blockchain PLC, Re

A restructuring plan may be sanctioned under Companies Act 2006 Part 26A where the company faces financial difficulties, the plan addresses those difficulties, and the relevant alternative would leave creditors and members no better off. Where cross-class cramdown is sought, particularly in a low-turnout process or where equity is substantially retained by the proponents, the court must scrutinise fairness rather than adopt a light-touch approach based solely on voting results.

The court must also be satisfied that the plan is workable, fairly allocates its burdens and benefits, contains no material blot, and is likely to take effect in relevant foreign jurisdictions.

Argo Blockchain PLC proposed a restructuring plan under Companies Act 2006 Part 26A, supported by Growler Mining Tuscaloosa, LLC. The plan contemplated Growler acquiring most of the company’s shares and provided for a compromise with the relevant creditors and members.

The court considered the company’s financial difficulties, the relevant alternative of administration followed by an orderly wind-down, the constitution and conduct of the creditor classes, the low attendance at the noteholder meeting, the fairness of the plan, the absence of any operative defect, and the likelihood of implementation in New York. The ruling recorded the court’s conclusion pending a fuller written judgment.

1. The plan was a compromise or arrangement between the company and the relevant creditors and members within Part 26A of the Companies Act 2006. Its purpose was to eliminate, reduce, prevent or mitigate the company’s financial difficulties and provide a trading future.

2. The relevant alternative was administration followed by an orderly wind-down. In that alternative Growler would not proceed, and no other rescuer was available.

3. The court maintained the class constitution and meeting arrangements previously directed. The explanatory statement, supplement and other information were sufficient to guide the participants.

4. The legal status of the noteholder meeting, at which only the chairman was present, was left for the full judgment. Nevertheless, the low turnout meant that the court could not adopt a light-touch approach. It had to be satisfied that the plan was fair to every constituency and met the more stringent requirements applicable where cross-class cramdown was sought.

5. No class member would be worse off under the plan than in the relevant alternative. The voting support, including the requisite 75% majority in value, was a salient consideration. The plan could reasonably have been approved by an intelligent and honest member of an assenting class acting in that member’s own interests.

6. The plan fairly allocated the burdens and benefits of the restructuring. It contained no blot making it unworkable or improper, and there was sufficient reason to suppose that it would be given effect in relevant foreign jurisdictions, particularly New York.

7. The court therefore concluded that it could and should sanction the plan. It was also disposed to permit the order to record the company’s intention to rely on the exemption in section 3(a)(10) of the United States Securities Act 1933.

This was a first-instance ruling. The court referred to an earlier convening hearing and convening judgment concerning class constitution and directions for the meetings.