Court sanctions restructuring plan

The administrators requested that the court sanction the restructuring plan, which certain of the company’s creditors had rejected. The court dealt with various issues in sanctioning the restructuring plan.  

The court dismissed the argument that the explanatory statement circulated by the administrators to the creditors was defective for lacking in information. The court held that the statement must provide sufficient information for the creditors to make informed decisions on the risks posed by the restructuring plan and the alternative outcome, being liquidation. This did not require the administrators to provide the creditors with the fullest specific information reasonably obtainable.

The court’s role was not to seek improvements in the proposed plan but to establish whether (i) the plan had been passed by the required majorities; (ii) the creditors had been properly informed and consulted; and (iii) the creditors were acting in accordance with their ordinary class interests (opposed to some special interest). This criteria was met.

To sanction the restructuring plan, the court had to be satisfied that on the balance of probabilities the restructuring plan was a better outcome for creditors compared with the alternative outcome (here, being liquidation). The court dismissed the argument that the administrators had to demonstrate that there was no real prospect of a better outcome for the dissenting creditor.

Amicus Finance PLC (in Administration) [2021] EWHC 3036 (Ch)