Waldorf Production UK Plc, Re

The court considered an application by Waldorf Production UK Plc (the Plan Company) for an order to convene two creditor meetings under Part 26A of the Companies Act 2006 to consider a restructuring plan. The judge held that the jurisdictional pre-conditions in section 901A (Conditions A and B) were prima facie satisfied: the Plan Company has encountered financial difficulties and the proposal contains the necessary "give and take" and is aimed at mitigating those difficulties. The proposed class composition — a secured creditors class (bondholders) and an unsecured creditors class (including HMRC and Capricorn) — was appropriate: the creditors' rights were not so dissimilar as to prevent consultation together. The court found no obvious roadblock to proceeding (including cross‑border recognition issues under Norwegian law) on the evidence before it, subject to undertakings and mirror arrangements to be given effect by the Bond Trustee. The judge gave directions on disclosure and procedure, granted creditors (notably HMRC) time to crystallise any jurisdictional or "roadblock" objections and explained the limited circumstances in which a preliminary determination would be ordered.

The Plan Company applied for directions to convene meetings of its creditors under Part 26A of the Companies Act 2006 for a restructuring plan affecting secured bondholders and unsecured creditors. The plan sought, among other things, to amend Bond Terms, extend bond maturities, extinguish unsecured claims in exchange for a 5% cash payment and contingent upside sharing, and to release certain intra‑group liabilities.

Background and parties:

• The Plan Company is an English public limited company with material licence interests in North Sea oil and gas assets and is part of a wider group whose parent companies are in administration.
• Secured creditors comprise holders of Senior and Super Senior Bonds governed by Norwegian law (represented in part by a Bond Trustee and a Steering Committee, SteerCo). Unsecured creditors include His Majesty's Revenue & Customs (HMRC) in respect of liabilities under the Energy (Oil and Gas) Profits Levy Act 2022 (EPL) and Capricorn Energy Plc (the M&A creditor).

Nature of the application: The Plan Company sought an order to convene two classes of creditors to consider approval of the restructuring plan under Part 26A and directions as to the conduct of the convening process.

Issues for the court: (i) whether the jurisdictional conditions in section 901A were satisfied; (ii) whether any obvious "roadblocks" (including cross‑border recognition and enforcement concerns) precluded convening meetings; (iii) whether the proposed class constitution was appropriate; and (iv) directions on disclosure and timing for any preliminary issues.

Court's reasoning and subsidiary findings:

• Condition A (financial difficulties affecting going concern) was satisfied on the evidence of liquidity pressure, the impact of the EPL and withdrawal of working capital facilities.
• Condition B was prima facie satisfied: the proposal involved give and take and was aimed at mitigating the company’s financial difficulties. HMRC reserved the right to argue otherwise and was given an opportunity to crystallise and raise that point in good time.
• The judge accepted the independent valuation and relevant alternative evidence as providing a workable basis for assessing comparative returns at the sanction stage (the relevant alternative being probable formal insolvency), but emphasised that merits and fairness are for the sanction hearing, not the convening hearing.
• Potential cross‑border enforcement issues arising from Norwegian law were not treated as an immediate roadblock because the Plan Company had put in place English law Deed Poll arrangements and the Bond Trustee proposed mirror arrangements under Norwegian law; that issue could nonetheless be raised at sanction.
• Two classes (secured and unsecured) were appropriate: the rights and interests of bondholders and unsecured creditors were not so dissimilar as to prevent joint consultation. Lock‑up and fee arrangements were not treated as fracturing the class.
• Procedural directions were given: the Practice Statement timing was sufficient (27 days' notice); disclosures requested by Capricorn (relating to a potentially avoidable dividend) should be handled cooperatively and, if necessary, by specific application; HMRC should crystallise any Condition B or roadblock objections within a stated time and the Plan Company should decide whether to apply for a preliminary determination before the sanction hearing. The court expressed reluctance to order preliminary hearings on arguable points unless plainly necessary.

Practical outcome: The convening hearing resulted in the court concluding there was a proper basis to proceed to convene meetings, subject to the directions indicated and without determining the merits of the Plan, which remain to be considered at a subsequent sanction hearing.

This was a first instance convening hearing. The court concluded that the application to convene creditor meetings under Part 26A should proceed: Conditions A and B in section 901A are prima facie satisfied; there was no immediately obvious roadblock to sanction; the proposed two-class structure (secured and unsecured creditors) was appropriate. The judge gave directions on notice, disclosure and the procedure for raising jurisdictional or 'roadblock' objections (HMRC to crystallise any objections within a given time and the Plan Company to consider whether to seek a preliminary determination). The merits and fairness of the Plan were reserved for any future sanction hearing.