Steinhoff scheme of arrangement approved

Steinhoff International Holdings NV, the ultimate holding company of the Steinhoff Group applied for an order sanctioning a scheme of arrangement. The scheme was narrow in that it sought to authorise amendments to some finance documents.

One issue arising from the application was the ability of a third party who was not a scheme creditor to object. Although a narrowly defined scheme, it was part of a much larger anticipated restructure aimed at settling a variety of disputes arising from alleged accounting irregularities discovered in 2017. The objector had on-going claims in South Africa and the Netherlands relating to these irregularities and claimed the scheme treated it unfairly. Although not a creditor, the court did have a wide discretion to take into account the interests of third parties and it had to exercise that in a commercially realistic manner.  

Here, the court accepted it could hear from the objector – it had a sufficient interest in the potential wider restructuring given a global settlement had the potential to affect its rights. It would be uncommercial and artificial to separate out the two and the court could hear from it to determine whether the scheme was fair. Nevertheless, the court did not consider there was a blot on the scheme and still sanctioned it. The outcome of the overall proposed restructure was not certain, but refusing to sanction the scheme as a first step would close that door completely and that would most likely bring further uncertainty and probable liquidation. 

Re Steinhoff International Holdings NV [2021] EWHC 184 (Ch)

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