Petrofac Limited & Anor, Re

The court granted the Plan Companies' application for permission to convene meetings to consider restructuring plans under Part 26A of the Companies Act 2006. The judge found that the jurisdictional threshold in section 901A (Conditions A and B) was satisfied: the companies had encountered financial difficulties affecting their ability to continue as going concerns and the proposals constituted a compromise or arrangement directed to mitigating those difficulties. The court held that there was international jurisdiction and no apparent "road-block" to convening meetings. On class composition the court refused to fracture the Senior Secured Funded Creditors into separate classes (rejecting the Saipem/Samsung submission) because the differences between Ad Hoc Group members and other secured creditors were not legally material for class formation. Notice to creditors was held to be adequate in all respects except for certain Unrepresented Shareholders, where remedial steps (including appointment of a Retail Investor Advocate and prospective costs orders) were taken. The convening order was made subject to standard safeguards to allow contested points to be raised at sanction.

Background and parties: The applications were brought by Petrofac Limited and Petrofac International (UAE) LLC (the Plan Companies) seeking permission to convene creditor and member meetings to consider a restructuring plan (the Plan) under Part 26A Companies Act 2006. The Plan forms part of a wider group restructuring negotiated with an Ad Hoc Group of senior secured lenders and contingent on substantial new money.

Relief sought: Permission to summon meetings of specified creditor classes to consider and, if thought fit, approve the Plan; directions as to notice, class composition and other convening matters.

Procedural posture: A convening hearing was adjourned from 28 February 2025 to 20 March 2025 to allow further evidence and timetable adjustments. Substantive opposition was advanced by creditor groups including the Saipem and Samsung Opposing Creditors, the Stewarts Creditors and the Fox Williams Creditors; a Retail Investor Advocate was appointed to protect retail shareholder interests.

Issues framed by the court:

• Notice: whether creditors and members had been given sufficient notice;
• Jurisdiction: whether section 901A conditions (A and B) were satisfied and whether there was sufficient international connection;
• Road-block: whether any obstacle rendered convening meetings pointless;
• Class composition: whether proposed classes, in particular the Senior Secured Funded Creditors, were properly constituted or required fracturing.

Evidence and materials: Witness statements from Plan Company directors and officers, the Retail Investor Advocate report, the Explanatory Statement, Practice Statement Letters and valuation/going-concern materials (Teneo reports) were before the court.

Reasoning: The court applied the Practice Statement governing convening hearings. On notice the court concluded the Practice Statement Letters and publication steps provided adequate notice to affected creditors other than certain unrepresented shareholder claimants; remedial measures were directed. Condition A (financial difficulties affecting going concern) was plainly met on the evidence and the Relevant Alternative was a group-wide insolvency. Condition B was satisfied because the Plan comprised a compromise/arrangement involving give and take and its purpose was to mitigate the companies' financial difficulties. International jurisdiction was established for unregistered foreign companies by reference to the court's power to wind up unregistered companies and sufficient connection, leaving detailed international effectiveness issues to sanction. No road-blocks were identified: structural devices (deeds of contribution, releases and third-party releases) were within Part 26A jurisdiction, and clauses limiting release for fraud or wilful misconduct were noted. On class composition the court applied established tests (right-based comparison with the Relevant Alternative) and concluded that the Senior Secured Funded Creditors should vote in a single class because the differences (notably fee and backstop/work fee benefits for Ad Hoc Group members) were not legally material to preclude consultation together; some benefits were available to other secured creditors or were payments for work done, reducing the case for fracturing. The adequacy of the Explanatory Statement and customary voting directions (including treatment of sanctioned persons and global noteholders) were addressed and appropriate directions made.

Outcome and consequential directions: The court made the convening order as sought by the Plan Companies with directions on notice, voting (including treatment of sanctioned persons and global noteholders), claims adjudication and other practical matters, reserving contested issues of fairness and international effectiveness for the sanction hearing. Permission to appeal the class composition decision was refused at this stage.

The court allowed the applications to convene the proposed meetings. The judge found that jurisdiction under section 901A of the Companies Act 2006 was made out (Conditions A and B), there was international jurisdiction and no apparent 'road-block' to convening meetings. The court declined to fracture the Senior Secured Funded Creditors into separate classes, concluding differences between Ad Hoc Group members and other secured creditors were not legally material for class formation. Notice was adequate save for certain unrepresented shareholders for whom remedial measures were directed. The convening order was made with standard safeguards and contested matters were left for the sanction hearing. An application for permission to appeal that class-composition ruling was refused.