R&I update – March 2021 – 1 / 5 观点
On 13 January 2021, the English High Court sanctioned three interconditional Part 26A restructuring plans for the subsidiaries of DeepOcean Group Holding BV.
The plans for two of the companies were approved by the required 75% majority. While the third plan received 100% approval by secured creditors, only 64.6% of unsecured creditors voted in favour.
Consequently, at the sanction hearing the court was required to consider whether the cross-class cram down mechanism in the restructuring plan should be engaged for the first time in the UK.
The court may cram down dissenting creditors and sanction a plan if certain requirements are met:
Once satisfied that the two conditions are met, the court has discretion to refuse to sanction a restructuring plan if it is not just and equitable, however, there is little guidance on this in the legislation.
Some of the factors the court considered in DeepOcean:
The DeepOcean judgment gives helpful guidance on the court's approach to the satisfaction of the requirements of Part 26A and the exercise of the court’s discretion to sanction a plan using cross-class cram down. Nevertheless, this case involved high levels of creditor support and no active opposition for the plans and clear financial benefits. Future cases may be less straightforward.
To discuss the issues raised in this article in more detail, please reach out to a member of our Restructuring & Insolvency team.