Enzen Global Limited & Anor, Re

This is a convening hearing under Part 26A of the Companies Act 2006 for two inter-conditional restructuring plans proposed by Enzen Global Limited and Enzen Limited. The court’s function at this stage is limited: to satisfy itself that it has jurisdiction (section 901A CA 2006), that affected creditors have been given sufficient notice, that there is no obvious and fundamental roadblock to sanction (including international effectiveness), and that the proposed classes are properly constituted. The judge held that Condition A and B of section 901A were satisfied, that the Practice Statement Letter distributed 22 days before the hearing gave adequate notice in the circumstances, and that there was no obvious roadblock to sanction (including as regards Spain after consideration of expert evidence). The proposed class constitution (secured classes, preferential HMRC class, unsecured and subordinated creditor classes, and a separate landlord class) was approved as appropriate at this stage. Directions were given for timetable and for filing any opposition, and permission was granted to rely on specified expert reports (including the Relevant Alternative reports and the Spanish law opinion).

The applications were made by Enzen Global Limited (the Parent) and Enzen Limited (the Company) for orders to convene creditor meetings to consider restructuring plans under Part 26A CA 2006. The Plans are inter-conditional, provide for amendment and extension of existing facilities including a debt-for-equity element and an A&E Transaction, and propose compromises of unsecured claims while excluding certain critical trade creditors.

Parties and background: The applicants are two English incorporated group companies in financial difficulty following pandemic-related and expansion losses. Existing secured lenders had provided incremental super-priority funding and, following enforcement, a share sale to a bidco controlled by secured creditors took place. The Plans are supported by a Restructuring Support Agreement and Relevant Alternative and valuation reports prepared by BTG and FRP.

Relief sought: orders under section 901C(1) CA 2006 to convene creditor classes to vote on the Parent Plan and the Company Plan.

Issues framed: (i) whether statutory jurisdictional conditions (section 901A) are satisfied; (ii) whether notice to creditors was sufficient; (iii) whether any obvious roadblock exists (including international effectiveness, notably Spain); (iv) whether the proposed class composition is appropriate, avoiding impermissible class manipulation; and (v) procedural directions for the sanction hearing timetable and evidence.

Court’s reasoning and conclusions:

• The court accepted the Plan Companies had encountered financial difficulties and that there is an arrangement with give and take for each class, satisfying section 901A.
• Notice via the Practice Statement Letter (22 days before the convening hearing) and further PSL materials was adequate given urgency and complexity, though unknown contingent claims will be captured by descriptive classes and notification by information platform.
• International recognition: the court considered a Spanish law opinion and concluded there was no obvious futility — there was a realistic prospect of recognition in Spain and no clear public policy bar.
• Class composition: the proposed secured, preferential (HMRC), unsecured, subordinated and landlord classes were appropriate on the facts; subordinated claims were properly separated because of legal subordination (double proof rule).
• Excluded creditors (critical trade creditors and certain advisers) may be paid in full; that approach is permissible where continuation of business requires it.
• The convening order should issue, subject to the court retaining the ability to revisit issues if material new circumstances arise.

The court gave directions for filing any opposition (HMRC and others to notify intent by 5 March and serve evidence by 12 March), set a timetable for replies and skeletons, and granted permission to rely on expert evidence (BTG, FRP and the Spanish law report).

The court ordered that the convening hearing applications proceed and the proposed creditor meetings be convened. Rationale: the statutory jurisdictional conditions under section 901A CA 2006 are met; sufficient notice has been given; there is no obvious and fundamental roadblock to sanction including as regards international effectiveness; and the proposed class constitution is appropriate at this stage. Directions were given for the timetable to the sanction hearing and for the filing of opposition and expert evidence.