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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Project Verona Ltd, Re [2024] EWHC 2080 (Ch) (04 June 2024) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2024/2080.html Cite as: [2024] EWHC 2080 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY & COMPANIES LIST (ChD)
Rolls Building Fetter Lane London WC2A 2LL |
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B e f o r e :
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IN THE MATTER OF PROJECT VERONA LIMITED |
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291-299 Borough High Street, London SE1 1JG
Tel: 020 7269 0370
[email protected]
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Crown Copyright ©
MR JUSTICE RICHARDS:
Introduction
no Plan Creditor had prior to or during the Plan Meetings raised any objections to or concerns with Restructuring Plan, the number or constitution of classes of Plan Creditors or the Plan Meetings convened to vote or requested any amendments to the Restructuring Plan.
The Relevant Alternative
Matters to be considered at this sanction hearing
Compliance with the provisions of the statute and jurisdiction
The votes in the assenting classes
Fair distribution of the benefits of the restructuring; horizontal and vertical comparisons
a. Are the benefits being shared fairly among those who have proposed to be bound by the Plan? That involves a horizontal and vertical comparison of the kind discussed in Re AGPS Bondco plc [2024] EWCA Civ 24 at [148] to [162]. The "horizontal" comparison compares the position of each class with the position of other classes if the Plan is sanctioned. The vertical comparison compares the position of each relevant class with the position of that same class in the relevant alternative.
b. However, that is not the only question that needs to be considered. It is also relevant to consider the benefits that will, if the Plan goes ahead, be obtained by those who are not subject to the Plan, such as employees, shareholders, Category A Landlords, critical trade creditors and HMRC.
"This exercise cannot, however, properly be carried out merely by asking whether any dissenting creditor will be any worse off as a result of the restructuring plan than in the relevant alternative. That would simply be to restate Condition A in section 901G. As a matter of principle, when the court exercises its discretion to impose a plan upon a dissenting class, it subjects that class to an enforced compromise or arrangement of their rights in order to achieve a result which the assenting classes of creditors consider to be to their commercial advantage. In my judgment, that exercise of a judicial discretion to alter the rights of a dissenting class for the perceived benefit of the assenting classes necessarily requires the court to inquire how the value sought to be preserved or generated by the restructuring plan, over and above the relevant alternative, is to be allocated between those different creditor groups".
a. The possibility of a more favourable outcome for the Secured Creditor as compared with the six unsecured classes involves no breach of the pari passu principle because the Secured Creditor benefits from security whereas the unsecured creditors do not.
b. Moreover, the Secured Creditor's benefit from the Plan comes largely from the value of his rights of conversion into equity. Therefore, the analysis above as to why I do not regard shareholders' benefits to be unfair applies to the Secured Creditor as well.
c. The six unsecured classes all obtain similar benefits under the Plan and so the "horizontal" comparison does not produce unfairness. No member of a dissenting class has come forward to explain why other classes of Plan Creditor who rank pari passu with them are nevertheless doing unfairly better than them under the Plan.
d. All classes of Plan Creditor are better off than they would be under the relevant alternative given my earlier findings as to that alternative. I do not therefore see any problem with the outcome of the vertical comparison.
Other matters and overall conclusion