The court considered whether it could make an order sanctioning a Part 26A restructuring plan ("Plan") where the company was incorporated in England to rely on the English court's jurisdiction to sanction a Plan.
The court had previously held that it had jurisdiction over the company, as proceedings under Part 26A fall outside the scope of the Lugano Convention. The court now considered whether:
- The provisions of the statute have been complied with
- Each class was fairly represented by the meeting and whether the majority was coercing the minority in order to promote interests which are adverse to the class that they purported to represent
- The scheme or plan was a fair one which a creditor could reasonably approve; and
- There is any "blot" or defect in the Plan.
The court held that:
- The meetings had been convened and held in accordance with the relevant court order and statutory majorities were achieved
- Although the turnout of bondholders was low, the turnout of 24.52% by value (66 different bondholders) was sufficient representation of the class, particularly given the extensive efforts made to ensure the bondholders had notice of the meetings;
- The Plan was one that a reasonable and honest member of the class of bondholders could approve. The alternative being an insolvency process that would result in the recovery of a small fraction of the value of the bonds; and
- Whilst the creation of the group's borrowing arrangements was artificial and solely to enable the use of the court's jurisdiction, the court was satisfied there was no defect, as ultimately the case fell outside the "good forum shopping" cases. Instead, the co-obligor structure is being used to achieve the best possible outcome for all stakeholders of the company and group.
In the Matter of Gategroup Guarantee Limited [2021] EWHC 775 (Ch)
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