Solvent scheme of arrangement

We previously considered a decision in Re Petropavlovsk plc where a company went into administration as a result of sanctions imposed following the war in Ukraine. The Court has recently sanctioned a scheme of arrangement, also prompted by events in Ukraine. 

This was proposed by a member of VEON Group which raised funds through a series of loan notes. The complication here was that part of the groups’ activities included a Russian subsidiary called VimpleCom. Various loan notes fell due for repayment in February and April 2023. Around 60% of these notes 2023 were believed to be held through a sanctioned entity in Russia. To further complicated matters  VimpleCom was subjected to a presidential decree requiring it to pay amounts owed to Russian bond holders and it was unable to raise funds on the international market.

What was proposed was that a scheme of arrangement be proposed in order to extend the loan note maturity dates to allow time for the subsidiary to be sold. Some note holders opposed this and one particular issue was whether holders due to be repaid in February should be treated as being in a different class to those due to be repaid in April, in a situation where the company was solvent. Ultimately the Court considered they should not. Those voting together should be in materially the same position but the Court did not consider that there was a sufficiently material difference to mean they cannot consult together.

There was also a tight timetable proposed for a single meeting and given the urgency, the Court was prepared to allow the meeting to be convened as that still allowed creditors one month to consider it. The proposed scheme was then sanctioned after over 97% scheme creditors voted in favour.

In Re Veon Holdings BV  [2022] EWHC 3473