Thames Water Utilities Holdings Limited (Consequentials hearing), Re

On a consequential hearing following sanction of a restructuring plan, the court may approve the plan in its existing form where proposed releases are temporally and substantively limited and preserving possible later office-holder claims would undermine the plan’s implementation. The first-instance judge should also assist in managing any urgent appeal by identifying the issues requiring appellate determination and focusing the grounds. Procedural fairness in a restructuring-plan application is assessed in the context of the jurisdiction being exercised. Such applications are not ordinary Part 7 proceedings and do not require the full procedural machinery of a conventional trial.

The hearing followed the court’s earlier judgment sanctioning a restructuring plan for Thames Water Utilities Holdings Limited. Two consequential issues remained: whether additional information rights should be included and whether releases in clause 16.2 should be modified to preserve possible claims by a future special administrator.

The court considered proposed wording for monthly information updates and allowed the Class B AHG time to respond. It retained the releases in their existing form, then determined applications for permission to appeal by Thames Water Limited, Charlie Maynard MP and creditor groups. Permission was granted on specified grounds, refused on the competition and procedural-fairness grounds, and left to the Court of Appeal to settle the final grounds.

1. Information rights. The court had previously found that the Common Terms Agreement, Schedule 4 did not provide full information to certain creditors not participating in the equity raise. Proposed wording for a new paragraph 59(d) in part 3 schedule 3 was accepted in principle, but the Class B AHG was given 48 hours to respond, followed by 24 hours for the Plan Company and Class A AHG to reply. The final form of order was reserved.
2. Releases. The court retained the releases in clause 16.2 without modification. Although the court could not be satisfied that no breaches of duty had occurred, the issue had been fully argued and had already been decided not to prevent sanction. Allowing a special administrator to reopen directors’ conduct, potentially after the company entered or exited a special administration regime, would be inconsistent with the rationale for the releases and could impede the directors, advisers and creditors in implementing the recapitalisation plan.
3. Appeal management. The first-instance judge accepted that, where possible, it is the judge’s duty to case-manage an appeal and focus the parties on the issues the Court of Appeal must decide. That duty was particularly important given the urgency of the potential appeal and the limited time available to the appellate court.
4. Permission to appeal. Permission was granted to Thames Water Limited on three targeted grounds and to Mr Maynard on four grounds. Permission was refused to the Class B AHG on the competition and procedural-fairness grounds. A Part 26A sanction application is a different form of jurisdiction from ordinary Part 7 litigation; the absence of full pleadings, disclosure, expert evidence and a conventional trial timetable did not establish fundamental procedural unfairness after four and a half days of evidence and argument. Permission was granted to the Class A AHG on valuation, legal and release grounds, including because of the public interest in appellate scrutiny.

The judgment is a first-instance consequential ruling following an earlier sanction judgment in the same restructuring-plan proceedings. It granted and refused permission to appeal on different grounds as set out in the ruling.