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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Speciality Steel UK Ltd, Re [2025] EWHC 587 (Ch) (13 February 2025) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2025/587.html Cite as: [2025] EWHC 587 (Ch)

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IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)

IN THE MATTER OF SPECIALITY STEEL UK LIMITED
AND IN THE MATTER OF THE COMPANIES ACT 2006

		The Rolls Building 7 Rolls Building Fetter Lane, London EC4A 1NL
		13 February 2025

MR JUSTICE HILDYARD:

1. This is an application in the context of a proposed reconstruction plan: the Plan Company being Speciality Steel UK Ltd, whose parent is Liberty Specialty Steels Ltd. Both of those companies are part of a group called the GFG Group, ultimately owned by Mr Gupta. The application is for an adjournment of the hearing to determine whether or not to sanction the Plan, which I directed to be heard over two days, with half a day's reading, and to come on before me, if possible, on 17 and 18 February. The directions I gave in that regard were set out in an order following the convening hearing, also heard before me on 17 December 2024.
2. The context of the proposed Plan has been very briefly described in the judgment that I gave on that occasion: the reference, for the record, is [2024] EWHC 3355 Ch As will be apparent from that judgment, in addition to directing court-convened class meetings as had been proposed, I mentioned a wrinkle, which was that the expectation or at least some real possibility of the arrangements comprising the Plan but also possibly extending to broader arrangements involving the GFG Group as a whole, might occasion the need for either amendments to the Plan or some rejigging of the class-convened meetings. I indicated some apprehension lest, in a sense, the original proposal was just a stalking horse and not what was actually, in the end, likely to be proposed. Although I permitted the matter to proceed to the stage of convening the class meetings, which I note were in fact held on 30 January 2025, it was with some emphasis that this was not a usual course, nor one which the court would ordinarily encourage. I made clear also on that occasion that if the contemplated changes were to be made, it would be much more difficult to proceed to a sanction hearing if the class meetings had not in fact considered the Plan as ultimately proposed.
3. In the event, there have been the negotiations which had been presaged, and these involved not only the particular case of the major opponents (as then proposed) to the Plan, namely what I shall compositely describe as "the Greensill creditors", but also the various other debts within the group, of which in fact I understand the Greensill creditors are owed a major part. The debts owed to them in respect of the activities of the GFG Group amount, in broad terms, to some US$4 billion.
4. The negotiations generally, I should note, have been ongoing for many years, and the steel companies, in common with many steel companies in the world, have had to, as it were, do their best pending the arrangements satisfactory to the creditors being reached.
5. The basis of the application before me, in a nutshell, is that now really is the time when the global settlement is likely to be reached and, more particularly, an accommodation is to be reached with the Greensill creditors perhaps generally but certainly and/or particularly with respect to the considerable debt owed to them and covered by the Plan. That debt is of approximately £289 million. There is, it seems from the submissions made to me, enough in the prospect that the Greensill creditors, who appear today by Mr Perkins, wish to have the opportunity to allow time for the proposed settlement actually to be reached. Whilst they were not the applicants for the adjournment because, as I have explained, the application was made by the Plan Company, nevertheless they have a live and very pertinent interest which was well explained by Mr Perkins.
6. The Plan Company's central point in support of the application they made is, in very broad terms, that an adjournment is required both to confine and define what is to be in issue at the sanction hearing and, though this is a less immediately salient point, would give them a better prospect, as they see it, to achieve the objectives of the Plan and its sanction. They stress that the rescue of the Plan Company is in what was described as the public interest, and it is certainly the case that the company operates four businesses - one in particular at Rotherham - and employs 3,000 people, whose livelihoods will be much affected by whatever happens in terms of the future under the Plan, whether or not sanctioned.
7. For the Greensill creditors, as I have indicated, Mr Perkins very cogently supported the submissions made on behalf of the applicants by Mr Haywood, and put the matter very simply as being that, from the Greensill creditors' point of view, an adjournment was necessary since otherwise they would be on the horns of a dilemma not knowing, until they have greater certainty, whether to support or at least not object to the Plan, or to oppose it, as they did on the previous occasion, having already indicated to me some fairly powerful points against sanction being given for the Plan as presently put forward.
8. I was referred, in written submissions, to a number of cases on the power of the court to adjourn. Of course adjournment necessitates relinquishing of a planned hearing and thus a diversion or waste of resources. This adversely affect other litigants, and, as a general matter, the court needs quite heavy persuasion to adjourn what is the equivalent of a trial. Nevertheless, as it seems to me, the central message and the prime guide for me must be the fairness, or not, of the adjournment, having regard to the benefits on the one hand, as identified by the applicants or supporters of the application, and the prejudice on the other hand.
9. A creditor called Harsco Metals Group Ltd. opposes the adjournment, and Mr Colclough of counsel has appeared on their behalf to explain the reasons why. In a nutshell, his points are that Harsco is substantially prejudiced because having itself had to bring a winding up petition to seek to recover some 4 million of indebtedness which has been outstanding since March last year - and I shall come back to the state of that petition shortly - there is plant and machinery hired (for want of a better word) to the Plan Company for which it has not been paid and which it would like back. There is a complication or uncertainty in that regard in that the Plan Company contends that it has what is called in the document to which I was taken, "a right of first refusal". However, the exact nature of the right is quite unclear; and it does not appear such as to be prevent Harsco insisting on the return of its plant and equipment, though I make no specific finding in that regard. More generally, I understood Harsco to contend that the reality is that, as presently constructed, the Plan appears to have real difficulties such that Mr Colclough was even moved to say that "everyone in the room knew that it was unlikely to be sanctioned", and therefore Harsco opposed any adjournment because of prejudice and to some extent because of futility.
10. The balancing of benefit (as plainly there is in getting much clearer exactly what is proposed so that the court can determine the matter by reference to facts rather than suppositions or conjectures) against prejudice is inevitably a difficult one, especially given that the advantages put forward are to some extent innominate and uncertain, and the prejudice is more easily defined. Nevertheless, I indicated just before the short adjournment that I would be minded to grant an adjournment over a controlled period, subject to provision for much tighter control by the court of the process and subject also to some means of, at least in part, addressing or removing the prejudice to Harsco. I am gratified to say that over the short adjournment the efforts of counsel and their teams (though in this regard Mr Colclough had the disadvantage of not having a solicitor in court or in fact easily available) has borne fruit and it has been proposed to the court - not as agreed, because Mr Colclough is not able to agree it - as something which the court could and should consider as a means of reconciling the balance of prejudice and benefit.
11. The agreement, or at least proposals, must, of course, be set out in an order which I can approve in due course but, in a nutshell, what is proposed is that there should be a report by the Plan Company to the court within seven days, or in seven days' time, whichever may be thought appropriate, outlining the state of the negotiations, both general and with respect to the Greensill creditors in particular. There then should be a hearing on 27 February to determine whether what had been arranged necessitated the convening of new meetings or at least the circulation of a revised explanatory statement; and indeed, if the point to the contrary is still pressed, to determine whether this is a viable plan which would fall within the jurisdiction of the court to sanction. According to what is then determined, there would be a sanction hearing on 24 March. All before me appeared to agree that that timetable is realistic, the central feature of it being that real concrete proposals are to be agreed, at least in principle, within two weeks, so that the shape of the Plan in the future and the explanation of it is by then clear.
12. To square Harsco, if I can put it that way, the Plan Company has agreed to pay the costs thrown away by this hearing, and leave for another time whether the costs, which are significant in the sense of being £70,000, should also cover the subsequent hearings, or part of them, and that Harsco should from today be paid its hire for which purpose a validation order would be made in light of the extant winding up petition which is to be heard on 19 February. I said I would come back to that. Of course since the presentation of that petition, the Plan Company's accounts and dealings have been frozen, save as permitted by the court. I am assuming, but cannot make any decision in this regard, that on the 19^th the petition will be stood over to accommodate or enable the sanction arrangements to proceed. Of course were that falsified, then Harsco would be left to its rights in the compulsory liquidation which would follow.
13. On this basis (and I apologise for the length of the judgment in respect of what appeared to be a reasonably straightforward adjournment application), I am prepared to accede to the directions proposed, noting, as I hope is already clear, that Mr Colclough was not objecting but could not agree in default of instruction. I very much hope that thought will be given to how this matter is to proceed, having indicated that the statutorily required explanatory statement has to be a full and complete statement and seems, though I do not decide this either, likely to have to extend to the broader arrangements at least so far as they affect the Plan Company. Over the short adjournment I did a little bit more research on that, and the fact that ancillary arrangements may very well have to be considered and be part of an explanatory statement has been clear for a very long time, going back, I think, to the first decision in Telewest by David Richards J (as he then was).
14. Finally, I should say that there was some equivocation as to whether there would be some restriction upon the court or the creditors being given proper transparency as to the arrangements made. Of course such global arrangements are delicate, but if the information is not sufficient for the creditors and then the court to be sure that they can make a fair and reasoned assessment, then the Plan will fail.