Restructuring plan sanctioned for German company

A German company has successfully applied to court for the sanctioning of their restructuring plan under Part 26A of the Companies Act 2006. The company was part of a wider corporate group which manufactured power transformers. Various companies in the group, including the applicant company, were party to a senior facilities agreement (SFA). The SFA was subject to English law.

The restructuring plan sought to extend the maturity dates in the SFA, namely to extend the repayment dates. One of the company’s creditors under the SFA was a bank which was wholly owned by a company subject to regulation 5 of the Russia (Sanctions) (EU Exit) Regulations 2019. Therefore, that creditor was prevented from voting on the restructuring plan. The creditor raised objection and sought to modify the restructuring plan.

The court sanctioned the restructuring plan. Regarding the creditor that was ultimately subject to sanctions, the court noted that there was no freestanding power to modify a plan approved by the creditor classes. The court’s intervention was limited to where the fairness requirement had not been fulfilled or where there were concerns on the outcome of the creditors’ meetings (for example, had the creditors been sufficiently well informed and given adequate notice). When considering any fairness or procedural irregularities, the court had to consider whether an honest and intelligent creditor acting in their own interests would reasonably have approved the plan. The court was satisfied that the extension of the maturity dates effected all creditors equally and that the sanctioned creditor did not have sufficient voting power to have changed the outcome of the creditor vote.

Re SGB-SMIT GmbH [2023] 6 WLUK 169

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