SCUR-Alpha 1092 GmbH, Re

At a scheme convening hearing, the court assesses whether the proposed scheme is jurisdictionally available and whether any apparent roadblock makes refusal of sanction inevitable. For class composition, the comparison is between creditors’ legal rights under the scheme and in the proper alternative, ordinarily insolvency. Commercial interests, personal characteristics and optional participation do not fracture a class where creditors retain sufficiently similar legal rights and a fair opportunity to participate. A foreign company may use Part 26 where it is liable to be wound up in England as an unregistered company and has a sufficient connection with England. At the convening stage, the court need only identify a reasonable prospect of international recognition, not certainty of effectiveness in every jurisdiction.

SCUR-Alpha 1092 GmbH, a German holding company, sought permission under Part 26 of the Companies Act 2006 to convene meetings of creditors concerning a restructuring of its English-law-governed senior financing liabilities. The proposed restructuring involved debt exchanges, new-money facilities, elevation rights, backstop fees, contingent value rights and arrangements for a creditor affected by sanctions.

The court considered notice, jurisdiction, class composition, the proposed meeting structure, the adequacy of the explanatory statement, the treatment of the designated scheme creditor, conditionality, sufficient connection with England and the reasonable prospect of recognition in Germany.

1. Order to convene. The court made the order sought for a one-class meeting, subject to a second class meeting if UniCredit became a scheme creditor following the proposed StaRUG debt exchange.
2. Notice and jurisdiction. Twenty-one clear days’ notice was adequate in the circumstances. The scheme was a compromise or arrangement because existing rights were released, exchanged or waived in return for new financing rights and contingent value rights. The German company was liable to be wound up as an unregistered company under Part V of the Insolvency Act 1986, so Part 26 jurisdiction was available. The Contribution Deed Poll also provided a sufficient basis, in principle, for compromising relevant rights against OpCo.
3. Class composition. The governing question was whether creditors’ rights were so dissimilar that consultation was impossible. The proper comparator was the position if the scheme failed, namely the likely insolvency scenario. Differences between the term and revolving facilities did not alter the nature of the creditors’ rights, which were substantially pari passu and pro rata. A proliferation of classes was therefore unwarranted.
4. Potential fracturing elements. Lock-up participation, optional new-money participation, elevation rights, market-rate backstop fees, reimbursement of advisers’ expenses, governance rights attaching to creditor positions and sanctions status did not fracture the class. These matters concerned commercial interests, services, personal characteristics or the manner of holding and distributing entitlements, rather than materially different legal rights. All eligible creditors had a fair and genuine opportunity to participate in the new-money facilities.
5. UniCredit. Because UniCredit’s separately negotiated exchange was a bespoke entitlement unavailable to other creditors, the court considered it prudent to place UniCredit in a separate class if it became a scheme creditor.
6. Sanctions and roadblocks. The court declined to order a preliminary determination of MeSoFa’s sanctions status. The issue could safely be addressed at sanction, and MeSoFa remained entitled to raise it then. The scheme’s conditionality, English-law connection and proposed parallel German restructuring disclosed no present roadblock. A reasonable prospect of recognition in Germany was sufficient at this stage.

First instance decision. No prior appellate decision is stated in the judgment.