Deutsche Glasfaser Group GmbH, Re

The court may sanction a creditor scheme where the statutory requirements and formalities are satisfied, the class has been fairly represented, the scheme is one which a creditor might reasonably approve, and no substantive blot affects implementation. A scheme is not necessarily uncertain merely because its implementation depends on choosing between defined alternatives after a specified contingency. The court may exercise its jurisdiction under Companies Act 2006, section 899, where the relevant contractual facilities are governed by English law.

Deutsche Glasfaser Group GmbH applied for sanction of a creditor scheme forming part of a wider recapitalisation. The scheme would restructure existing debt, provide a new super senior facility, amend hedging arrangements and support new equity funding. Its implementation depended on whether a German tax ruling was received and qualified as a binding ruling by a long-stop date.

The scheme creditors formed a single class. The meeting was attended by 98 of 100 creditors, all of whom voted in favour. The central issues were whether the statutory requirements and procedural formalities had been met, whether there had been fair representation, whether the scheme was fair, and whether the contingent implementation structure constituted a blot.

1. Sanction. The court sanctioned the scheme and proposed to make the order sought.
2. Jurisdiction and formalities. The statutory provisions and relevant formalities had been complied with. There was a sufficient connection with England and Wales for the court to exercise jurisdiction under section 899 of the Companies Act 2006, because the Senior Facilities were governed by English law. Subsequent circulation of revised scheme documents did not invalidate the process because the changes were immaterial drafting and mechanical amendments, and the meeting had been properly adjourned. Changing the long-stop date under the Lock-Up Agreement did not amend the scheme or any Scheme Transaction Document.
3. Representation and fairness. The very high turnout established fair representation. There was no evidence of majority coercion or interests adverse to the class. The scheme was commercially rational because it offered materially improved recoveries compared with the comparator, and it was one which a creditor might reasonably approve.
4. Blot. The unresolved choice between two implementation structures did not constitute a blot. There would have been a blot if there were real uncertainty about implementation, but there was no such uncertainty where the alternatives and the contingency determining the election were clearly defined. The court agreed with the analysis in Re All Scheme [2022] BCC 1068.
5. International effectiveness. The court was satisfied, on the expert evidence, that the scheme was likely to be effective in Germany. A contractual variation made under the governing law of the contract would conventionally be respected by other legal systems.