Companies Act 2006, section 901G

Sanction for compromise or arrangement where one or more classes dissent

PART 26A Arrangements and reconstructions: companies in financial difficulty

(1) This section applies if the compromise or arrangement is not agreed by a number representing at least 75% in value of a class of creditors or (as the case may be) of members of the company (“the dissenting class”), present and voting either in person or by proxy at the meeting summoned under section 901C.

(2)If conditions A and B are met, the fact that the dissenting class has not agreed the compromise or arrangement does not prevent the court from sanctioning it under section 901F.

(3)Condition A is that the court is satisfied that, if the compromise or arrangement were to be sanctioned under section 901F, none of the members of the dissenting class would be any worse off than they would be in the event of the relevant alternative (see subsection (4)).

(4) For the purposes of this section “the relevant alternative” is whatever the court considers would be most likely to occur in relation to the company if the compromise or arrangement were not sanctioned under section 901F.

(5)Condition B is that the compromise or arrangement has been agreed by a number representing 75% in value of a class of creditors or (as the case may be) of members, present and voting either in person or by proxy at the meeting summoned under section 901C, who would receive a payment, or have a genuine economic interest in the company, in the event of the relevant alternative.

(6)The Secretary of State may by regulations amend this section for the purpose of—

(a)adding to the conditions that must be met for the purposes of this section;

(b)removing or varying any of those conditions.

(7)Regulations under subsection (6) are subject to affirmative resolution procedure.

Read section 901G in the full Act → Definitions (4) Cases (65)

Definitions used in section 901G

arrangement

“arrangement” includes a reorganisation of the company’s share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods;

Defined in s.901A(4) · see it in the full Act
member

(2) In sub-paragraph (1) “member” has the same meaning as it has by virtue of section 7(1) of that Act .

Defined in Sch.2 Pt.1 · see it in the full Act
company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

“company”—

(a)

in section 901J (powers of court to facilitate reconstruction or amalgamation) means a company within the meaning of this Act, and

(b)

elsewhere in this Part means any company liable to be wound up under the Insolvency Act 1986 or the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)).

Defined in s.901A(4) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
the court

(1) Except as otherwise provided, in the Companies Acts “the court” means—

(a)in England and Wales, the High Court or the county court;

(b)in Scotland, the Court of Session or the sheriff court;

(c)in Northern Ireland, the High Court.

Defined in s.1156(1) · see it in the full Act

(2) The provisions of the Companies Acts conferring jurisdiction on “the court” as defined above have effect subject to any enactment or rule of law relating to the allocation of jurisdiction or distribution of business between courts in any part of the United Kingdom.

Defined in s.1156(2) · see it in the full Act

Cases considering section 901G (65)

Saipem SpA & Ors v Petrofac Limited & Anor

[2025] EWCA Civ 821 · 1 July 2025Interprets

The Court interpreted and applied the cross-class cram-down jurisdiction. Satisfaction of its statutory conditions is necessary but does not remove the court’s obligation to assess fairness when exercising its sanction discretion (see paras [70]-[102]; [106]-[191]). The subsection identifies a dissenting class as one failing to approve a plan by at least 75% in value of those present and voting (see para [7]). Where Conditions A and B are met, the dissent of a class does not prevent sanction under section 901F (see para [7]). The no worse off condition compares the financial value of existing rights in the relevant alternative with the rights offered under the plan. It includes third-party rights released by the plan, but excludes wider commercial advantages unconnected with affected rights (see paras [79]; [91]-[102]). The relevant alternative is the event which the court considers most likely if the plan is not sanctioned. The accepted alternative in this case was insolvent liquidation (see paras [7]; [44]). Condition B requires approval by the prescribed majority of a class which would receive a payment or have a genuine economic interest in the relevant alternative (see para [7]).

Kington S.À.R.L. & Ors v Thames Water Utilities Holdings Limited & Anor

[2025] EWCA Civ 475 · 15 April 2025Interprets

The cross-class cram-down power permits sanction despite a dissenting class where the statutory conditions are met. Satisfaction of those conditions does not exhaust the court’s discretion, which also requires scrutiny of fairness and allocation. (see paras [34]; [102]–[113]) The no-worse-off condition is necessary before a dissenting class may be crammed down, but it is not sufficient by itself to justify sanction. (see para [104])

Strategic Value Capital Solutions Master Fund LP & Ors v AGPS BondCo PLC

[2024] EWCA Civ 24 · 23 January 2024Interprets

Cross-class cram down removes a class veto but requires a separate discretionary assessment of fair allocation and justified differential treatment. The sanction discretion was exercised on incorrect principles and the sanction order was set aside. (see paras [153]–[160]; [233]; [280]) A dissenting class has not provided the enhanced 75% approval required for ordinary sanction. A rationality test based on a lesser majority cannot replace the distinct cross-class assessment. (see para [130]) The permissive wording preserves the sanction discretion after Conditions A and B are satisfied. Their satisfaction creates no presumption favouring sanction. (see paras [153]–[154]) Condition A requires every dissenting class member to be no worse off than in the relevant alternative. It supplies a jurisdictional floor, rather than an answer to fair distribution of restructuring benefits. (see paras [12]; [153]; [160]) The relevant alternative is the most likely outcome absent sanction. Here it was formal insolvency with equal unsecured ranking, providing the reference point for comparison rather than bond-market pricing while the group remained a going concern. (see paras [42]; [162]; [236]–[238]) Condition B requires statutory approval from a class receiving payment or having a genuine economic interest in the relevant alternative. Representation and proper voting motives deserve particular scrutiny for the class relied upon to satisfy it. (see paras [12]; [120]) Cited only.

45 more judgments, and what each says about section 901G, are in the case-law panel in the full Act.

Amendments and notes

2 notes from legislation.gov.uk

Modifications

  1. C1317Ss. 901A-901J applied (with modifications) by S.I. 2009/1804, reg. 45A (as inserted (26.6.2020) by The Limited Liability Partnerships (Amendment etc.) Regulations 2020 (S.I. 2020/643), reg. 1(1), Sch. 3 para. 3 (which amending S.I. is revoked (16.2.2021) by S.I. 2021/60, reg. 1(1), 2))
  2. C1318Ss. 901A-901J applied (with modifications) (16.2.2021) by S.I. 2009/1804, reg. 45A (as inserted by The Limited Liability Partnerships (Amendment etc.) Regulations 2021 (S.I. 2021/60), reg. 1(1), Sch. 3 para. 3 (with reg. 4(2)))