Enzen Global Limited & Anor, Re

The court sanctioned two inter-conditional restructuring plans under Part 26A of the Companies Act 2006 for Enzen Global Limited and its subsidiary Enzen Ltd. The judge accepted expert valuation evidence and concluded that the realistic alternative was an accelerated sale process followed by administration which would produce materially lower recoveries for creditors. The court applied section 901G to cram down dissenting classes after finding that Condition A (no member of a dissenting class would be worse off than in the relevant alternative) and Condition B (approval by 75% in value of a relevant class with a genuine economic interest) were satisfied.

The decision emphasised: (i) the sufficiency of the explanatory statements and supplemental materials to enable informed voting; (ii) that evidence of likely returns in administration supported the 'no worse off' finding; (iii) that the restructuring surplus was principally generated by secured creditors through deleveraging and equitisation and that allocation of benefits was not manifestly unfair; and (iv) that there was a reasonable prospect the English sanction would be effective in Spain where relevant assets and liabilities are located.

Background and parties: Enzen Global Limited (the Parent) and its subsidiary Enzen Ltd (the Company), both incorporated in England and Wales and operating an asset-light infrastructure advisory business, faced acute liquidity pressure after international acquisitions and project delays. Significant borrowings secured by charges over substantially all group assets were held by a group of Existing Secured Creditors. Accrued debts to HMRC and other defaults led to a threatened insolvency and an enforcement sale of share security to a company controlled by the Existing Secured Creditors.

Nature of the application: Each plan company sought sanction of a restructuring plan under Part 26A of the Companies Act 2006. The plans were inter-conditional and proposed to exclude certain critical trade creditors, amend and extend facilities for Super Senior Creditors, convert interest to PIK for some creditors, provide new money, issue synthetic equity to Facility B creditors, and compromise unsecured and preferential claims (including HMRC) for fixed payments.

Procedural posture: Hildyard J ordered the convening of creditor class meetings. Several classes, including secured and some senior creditors, unanimously approved the plans at meetings convened under that order. Other classes, including certain unsecured and subordinated creditors, voted against or were deemed to dissent. The sanction hearing took place on 25 March 2025 before Norris J (sitting in retirement).

Issues for decision:

• whether the court had jurisdiction and whether the plans constituted arrangements/compromises under Part 26A (no issue);
• whether the explanatory statements provided sufficient information for informed voting (court found they did);
• whether Conditions A and B in section 901G were satisfied so that dissenting classes could be crammed down (court answered yes);
• whether the allocation of the restructuring surplus and the treatment of dissenting classes was manifestly unfair (court found no manifest unfairness); and
• whether the sanction would have a reasonable prospect of effectiveness in relevant foreign jurisdictions (court found a reasonable prospect as to Spain).

Reasoning: The court accepted expert evidence that the realistic alternative would generate significantly lower recoveries (in some cases nil) for unsecured and preferential creditors. On Condition A the judge found on the balance of probabilities that no member of a dissenting class would be worse off under the plans than under the relevant alternative. On Condition B the judge found that classes with a genuine economic interest satisfied the 75% by value test. The discretionary exercise under s901G was conducted by high-level review of fairness in allocation: the restructuring surplus was principally created by secured creditors who were contributing new money and equitising debt, unsecured creditors received real consideration for release of claims, and HMRC’s treatment reflected its preferential status and commercial leverage. Notices of opposition were considered and dismissed on the evidence (or lack of evidence). The court also considered cross-border effectiveness and accepted expert evidence that there was at least a reasonable prospect of effect in Spain.

The court sanctioned both the Parent's and the Company's restructuring plans under Part 26A of the Companies Act 2006, exercising the power in section 901G(2) to override dissenting classes. The judge found that Condition A (no worse off) and Condition B (75% in value of a class with a genuine economic interest) were satisfied, that explanatory material was sufficient, that the allocation of restructuring benefits was not manifestly unfair, and that there was a reasonable prospect the orders would be effective in Spain.