Following a German Courts’ refusal to recognise a Plan approved under Part 26A of the Companies Act 2006, the recent case of Re Standard Profil Automotive GMBH [2025] EWHC 2312 provided the opportunity for the Court to consider the international effectiveness of Part 26 reorganisation Schemes.
The matter before the Court related to a Scheme of Arrangement proposed between the Company (Standard Profil Automotive GMBH) and its creditors under Part 26 of the Companies Act 2006, the objective of which was to effect a solvent reorganisation of the Company.
The proposed Scheme had first been considered by Mr Justice Richard Smith who by way of a judgment dated 29 July 2025 granted permission to convene a meeting of the Company’s creditors to vote on the Scheme.
Subsequent to the judgment of Mr Justice Smith, it was recognised by the creditors that the proposed Scheme “would (or at least could) have resulted in the Scheme company exceeding its maximum debt capacity.” A modification was made to the proposed Scheme and the amended Scheme was again presented to Mr Justice Smith for reconsideration. By way of a further order dated 13 August 2025 Mr Justice Smith again granted permission to convene a meeting of creditors.
A Scheme meeting was held on 4 September 2025, at which the Scheme was approved by 100% (in both share value and number) of those present and voting. Following the Scheme meeting, in accordance with the processes set out under Part 26, the Scheme (now approved by creditors) was resubmitted to the Court to consider whether to sanction the Scheme.
In reaching a decision as to whether to sanction the Scheme, Mr Justice Meade (now sitting), focussed primarily on the issue of international effectiveness of Part 26 Schemes, the Company being a company registered in Germany, and a Frankfurt Court having recently refused to recognise a plan made under Part 26A of the Companies Act 2006.
Mr Justice Meade distinguished between a Part 26 Scheme and a Part 26A Plan, noting that (in contrast to Part 26A Plans) a Part 26 Scheme is definitionally not an insolvency arrangement, and the international recognition of insolvency arrangements went to the heart of the Frankfurt Court’s judgment.
Mr Justice Meade also held that both the Hague Convention and Hague Judgments Convention provided a route to recognition of Part 26 Schemes by signatory state and that these routes to recognition were unaffected by the decision of the Frankfurt Court.
As such, having been satisfied of both the reasonableness of the presented Scheme, and its international effectiveness, the Court sanctioned the Scheme, allowing the Company’s reorganisation.
In reaching this decision, the Court did not opine on the correctness of the Frankfurt Court’s decision, leaving the question of the enforceability of Part 26A Plans the subject of future judicial consideration.
Our content explained
Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.