On 4 March 2024, the High Court approved the amended restructuring plan (the Plan) of Project Lietzenburger Straße Holdco S.à.r.L (the Company) a Luxembourg incorporated company part of the German Aggregate Holdings Group, despite refusing to sanction its original plan. The modification of the Plan followed the guidance set out in the Court of Appeal's landmark judgment in Adler (Adler) (see our Alert).

Background

The Plan originally proposed that €245 million of subordinated debt claims be cancelled for zero consideration. Following Adler, the Company amended the Plan to provide a pro rata payment of €200,000 to subordinated creditors so that this would be considered a 'compromise or arrangement'. 

Jurisdiction issues

• At the first sanction hearing, the High Court held that it had "no power" to either sanction the plan in its unamended form or amend the Plan. Instead, the Court convened a further meeting at which subordinated creditors were prohibited from voting on the basis that they were 'out of money' and had no economic interest in the Company. 

• The Company moved its centre of main interests (COMI) to England to utilise the country's restructuring framework. Despite opposition from the subordinated creditors, the Court held that this did not count as bad "forum shopping". The shift was in the interests of the stakeholders as a whole and there is a reasonable prospect that the Plan will be recognised in the key jurisdictions of Germany and Luxembourg.

Second time lucky

The High Court sanctioned the amended plan at a second sanction hearing.

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team.

Re Project Lietzenburger Straße Holdco S.À.R.L. [2024] EWHC 468 (Ch) (4 March 2024)