Argo Blockchain plc, Re

A restructuring plan may be sanctioned under Companies Act 2006 Part 26A even where a class has approved it by proxy, if the statutory requirements and fairness standards are satisfied. A valid meeting ordinarily requires the assembly of at least two persons. A proxy-holder attending alone does not satisfy that requirement, except where the class consists of a single creditor or member.

Where cross-class cramdown is required, the court must assess fairness itself. It should compare the treatment of the dissenting class with the relevant alternative and assess how the restructuring surplus is allocated by reference to the parties’ contributions, the plan’s objectives, stakeholder engagement and any justified differential treatment. Low turnout may require enhanced scrutiny but is not independently fatal.

Argo Blockchain plc applied for sanction of a restructuring plan under Part 26A of the Companies Act 2006. The plan involved the release of debt owed to Growler and noteholders, new capital and assets from Growler, equity allocations to Growler and noteholders, dilution of existing shareholders, and delisting from the London Stock Exchange while seeking to preserve the company’s NASDAQ listing.

Growler, the noteholders and existing shareholders voted in favour. At the noteholder meeting, however, only the chair attended and voted as proxy. The court therefore considered whether there had been a legally valid meeting, whether the noteholders were a dissenting class, whether the statutory cross-class cramdown conditions were met, and whether the plan was fair, effective and likely to be recognised internationally.

1. Meeting requirement. A meeting under Part 26A ordinarily requires an assembly or coming together of two or more persons. A chair attending alone, even while holding proxies for multiple creditors, does not satisfy that requirement. The single-member exception applies to Growler because it was the only member of its class. The noteholders were therefore treated as a dissenting class and the court proceeded under section 901G. (Paras [76]-[86].)
2. Approach to sanction. The court has an unfettered discretion under section 901F. The rationality standard may ordinarily apply to a reliable assenting class, but it is insufficient where cross-class cramdown is sought or voting results are not safely representative. Given the defective noteholder meeting, very low turnout and potential differences between LSE shareholders and ADS holders, the court applied the stricter fairness assessment to both assenting constituencies. (Paras [97]-[125].)
3. Statutory conditions. Condition A required comparison with the most likely relevant alternative. The court identified an administration and orderly wind-down, and applied the three-stage comparison described in Re Virgin Active Holdings Ltd: identify the likely alternative, determine its consequences for the dissenting class, and compare them with the plan outcome. Noteholders and shareholders would each do better under the plan. Condition B was satisfied because Growler, an assenting class, would have a genuine economic interest in the relevant alternative. (Paras [127]-[132].)
4. Fairness. Fairness required vertical and horizontal comparison, including fair sharing of the restructuring burden and surplus. The court considered the plan’s objective, the relevant alternative, the contributions of debt releases, new money, assets and expertise, stakeholder engagement, and the evolution of the plan. Growler contributed most of the restructuring value and could validly make a gift from its allocation to noteholders and shareholders. The exclusion of liabilities essential to the continuing business was justified. (Paras [133]-[170].)
5. Other issues. Low turnout did not itself invalidate the shareholder approval. Reduced liquidity after LSE delisting, the absence of a public UK market, and retail concerns did not outweigh the plan’s benefits compared with administration. No operative blot was identified. The evidence established a real prospect of recognition in New York, and the court accepted evidence concerning reliance on section 3(a)(10) of the US Securities Act 1933, while observing that independent expert evidence on foreign law is ordinarily preferable. (Paras [171]-[207].)
6. Order. The court sanctioned the restructuring plan under Part 26A. It confirmed that, even where section 901G is engaged, sanction is granted under section 901F.