Speciality Steel UK Limited, Re

An adjournment of a planned sanction hearing should be granted only where fairness requires it. The court must balance the benefits of obtaining clearer proposals and avoiding determination by conjecture against the prejudice caused by delay and wasted resources.

Any adjournment should be for a controlled period and may require safeguards, including directions for further reports, revised explanatory materials, costs, or payment of ongoing liabilities. A reconstruction plan must provide creditors and the court with sufficient transparency to make a fair and reasoned assessment. Ancillary arrangements affecting the plan company may need to be addressed in the explanatory statement.

Speciality Steel UK Ltd applied to adjourn the sanction hearing for a proposed reconstruction plan. The application followed negotiations concerning a possible wider settlement involving the GFG Group and creditors, particularly Greensill creditors.

Greensill supported the adjournment. Harsco Metals Group Ltd opposed it, relying on prejudice arising from unpaid indebtedness, hired plant and machinery, and a pending winding-up petition. The central issue was whether the proposed benefits of allowing negotiations to develop outweighed the prejudice and delay caused by vacating the planned sanction hearing.

1. Application granted. The sanction hearing was adjourned and directions were made for a report on negotiations, a hearing to consider whether new meetings or a revised explanatory statement were required, and a later sanction hearing.
2. The governing consideration was fairness. The court had to balance the benefits of obtaining a clearer and more concrete proposal, enabling the plan to be determined by reference to facts rather than conjecture, against the prejudice caused to other creditors and litigants by delay and wasted resources.
3. Although the court requires heavy persuasion before adjourning what is equivalent to a trial, an adjournment may be justified where negotiations have a realistic prospect of materially clarifying the plan. The adjournment should be controlled and accompanied by safeguards addressing identifiable prejudice.
4. The safeguards included payment of Harsco’s costs thrown away by the hearing and payment of its ongoing hire charges, subject to a validation order in light of the pending winding-up petition. The court made no final determination concerning the petition or Harsco’s alleged right to recover its equipment.
5. The statutorily required explanatory statement must be full and complete. Arrangements ancillary to the plan may need to be included where they affect the plan company. Creditors and the court must receive sufficient transparency to make a fair and reasoned assessment; otherwise the plan will fail.

The judgment records that the court had previously directed class meetings at a convening hearing on 17 December 2024, reported as [2024] EWHC 3355 (Ch). The meetings were held on 30 January 2025. This judgment concerned the subsequent application to adjourn the sanction hearing.