Thames Water Utilities Holdings Limited (Consequentials hearing), Re

The court dealt with two consequential issues arising from the sanction of a restructuring plan under the Companies Act 2006 (Part 26A): the adequacy of proposed information rights for certain creditors and the scope of releases in the plan (clause 16.2). The judge held that the Common Terms Agreement, Schedule 4, did not provide full information rights for the Subordinated Creditor and the Class B AHG if they did not participate in the equity raise and approved a narrowly drafted amendment (a new paragraph 59(d) to part 3 schedule 3) to provide monthly updates subject to reasonable confidentiality and carve-outs for commercially sensitive information and Market Abuse Regulation constraints, leaving a short period for Class B to respond. The court refused to widen or qualify the releases and approved the plan in its existing form, concluding that permitting later reopening by a special administrator would be inconsistent with the rationale for releases and would inhibit the directors and advisers in implementing the recapitalisation transaction. The court also exercised case management by granting permission to appeal to specified parties on identified grounds, refusing others (notably a competition law ground and a procedural fairness complaint by Class B), and setting tight timetables for filing grounds of appeal.

This was the consequential hearing after the judge handed down his principal sanction judgment for the restructuring plan of Thames Water Utilities Holdings Limited. The parties present included the Plan Company, Class A and Class B groups of plan creditors, Thames Water Limited, the Supporting Bank Group and an interested Member of Parliament. The hearing addressed two discrete questions left open in the sanction judgment: (i) whether the information rights in the Common Terms Agreement and plan as drafted provided adequate disclosure to the Subordinated Creditor and the Class B AHG if they did not participate in the equity raise; and (ii) whether the releases in clause 16.2 should be altered to preserve a later right for a special administrator or officeholder to bring claims.

Nature of the application: consequential directions following sanction of a Part 26A restructuring plan and applications for permission to appeal.

Issues framed by the court:

• whether to modify the plan/order to create broader information rights for non‑participating subordinated and Class B creditors;
• whether to limit or qualify the releases in clause 16.2 to preserve potential officeholder claims; and
• whether to grant permission to appeal and, if so, on which grounds for which parties.

Court's reasoning and disposition: on information rights, the judge concluded Schedule 4 did not give full information to particular creditors and accepted the Plan Company's proposed insertion of a new paragraph 59(d) to provide monthly updates, subject to confidentiality and commercially sensitive carve-outs; the judge permitted the Class B AHG a short period (48 hours) to propose amendments and set a timetable for responses and a sealing decision by the end of the week. On releases, the judge declined to alter clause 16.2 or to preserve an ability for a special administrator later to reopen directors' conduct claims, reasoning that permitting such reopening would defeat the rationale for releases, would operate in terrorem against directors and advisers and would impede the successful implementation of the recapitalisation. On permission to appeal, the judge granted targeted permission to appeal to TWL (three grounds), to Mr Maynard (four grounds), to the Class A AHG (grounds 1, 2 and 4) and to the Class B AHG (grounds 1, 2 and 4), refused the competition ground and the procedural fairness ground for Class B, and directed focused filing timetables to assist case management in the Court of Appeal.

The court approved the restructuring plan in its existing form without modification. It authorised a narrowly framed amendment to provide monthly information updates (new paragraph 59(d) in part 3 schedule 3) subject to confidentiality and carve-outs for commercially sensitive material and the UK Market Abuse Regulation, and gave the Class B AHG a short period to propose alternative wording. The court refused to modify clause 16.2 releases to preserve a later right for a special administrator to reopen directors' or advisers' conduct claims, on the basis that that would undermine the rationale for the releases and impede the recapitalisation. The judge granted permission to appeal to specified parties on limited grounds and refused other grounds (including the competition point and a procedural fairness complaint by Class B), setting tight timetables for filing grounds of appeal.