Agps Bondco Plc

JurisdictionEngland & Wales
JudgeMr Justice Leech
Judgment Date21 April 2023
Neutral Citation[2023] EWHC 916 (Ch)
Docket NumberCR-2023-000936
CourtChancery Division
In the Matter of Agps Bondco Plc
And in the Matter of the Companies Act 2006

[2023] EWHC 916 (Ch)


Mr Justice Leech





Royal Courts of Justice, Rolls Building

Fetter Lane, London, EC4A 1NL

Mr Daniel Bayfield KC, Mr Ryan Perkins and Ms Annabelle Wang (instructed by White & Case LLP) appeared on behalf of the Applicant Company

Mr Tom Smith KC and Mr Adam AL-Attar (instructed by Akin Gump LLP) for an ad hoc group of opposing creditors

Ms Felicity Toube KC and Mr Henry Phillips (instructed by Milbank LLP) for a steering committee of creditors

Hearing dates: 3 to 5 April 2023, 12 April 2023


This judgment was handed down remotely at 3.30 pm on 21 April by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Mr Justice Leech

I. The Application


By Claim Form dated 20 February 2023 the Claimant, AGPS BondCo PLC (the “ Plan Company”), applied for an order to convene and conduct meetings for the purpose of considering and, if thought fit, approving a restructuring plan (the “ Plan”) under Part 26A of the Companies Act 2006 and to give directions for the hearing of the Plan Company's application to seek the sanction of the Court to the Plan.


The Plan will implement certain amendments to the Plan Company's indebtedness arising under a series of senior unsecured notes or “ SUNs”. These notes comprise six series of senior unsecured notes governed by German law and they were divided into six classes (corresponding to the six series of SUNs) for the purposes of voting on the Plan. I will call the holders of the SUNs collectively the “ Plan Creditors”.


On 24 February 2023 the convening hearing took place before Sir Anthony Mann (the “ Convening Hearing”) and he made an order (the “ Convening Order”) giving the Plan Company liberty to convene six meetings of the Plan Creditors (the “ Plan Meetings”) to consider and, if thought fit, approve the Plan. Sir Anthony Mann also gave a judgment in which he explained his reasons for making the Convening Order and giving the directions in the Convening Order (the “ Convening Judgment”): see [2023] EWHC 415 (Ch).


On 21 March 2023 the Plan Meetings took place and the Plan was approved by over 75% in value of those voting at each Plan Meeting apart from one class of Plan Creditors (the “ 2029 Plan Creditors”) which approved the Plan by a majority in value of 62.28% of those voting at the relevant meeting. In the other five classes the Plan was approved by majorities ranging from 80% to 98%.


The Plan Company, therefore, applied to the Court to sanction the Plan and to order a “cross-class cram down” in relation to the 2029 Plan Creditors. On 3 to 5 April 2023 I heard the Plan Company's application and Mr Daniel Bayfield KC, Mr Ryan Perkins and Ms Annabelle Wang appeared for the Plan Company.


Two groups of creditors appeared by counsel at the hearing. Ms Felicity Toube KC and Mr Henry Phillips appeared on behalf of the first group which consisted of a steering committee of Plan Creditors with holdings across all six series of the SUNs (“ SteerCo”) who supported the sanction of the Plan. Mr Tom Smith KC and Mr Adam Al-Attar appeared on behalf of the second group which consists of an ad hoc group of Plan Creditors who hold notes due in 2029 and I will refer to them collectively as the “ AHG”. They opposed the sanction of the Plan.


There were a number of issues of fact between the parties and they agreed that the Court should hear oral evidence at the hearing. This imposed a heavy burden both on the parties and the Court and I sat from 9.30 am to 5 pm each day. I also dispensed with oral opening submissions and heard the witnesses give evidence before the parties made their oral submissions. Following the hearing I indicated that I would announce the Court's decision on 12 April 2023 with reasons to follow.


On 12 April 2023 I announced that I would sanction the Plan and I made an Order in those terms. I also adjourned the hearing until the hand down of this judgment so as to extend time for any application for permission to appeal. I made it clear to counsel that I would hear their applications for permission to appeal and to abridge the time for any appeal (or application for permission to appeal) when I handed down judgment. In this judgment I set out the detailed reasons why I made the order sanctioning the Plan.

II. Background


The Plan Company is incorporated in England and Wales. It is a subsidiary of Adler Group SA (the “ Parent Company”), a company incorporated in Luxembourg. The Parent Company and its subsidiaries (including Adler Real Estate AG (“ Adler RE”) and Consus Real Estate AG (“ Consus”)) form the “ Group”. The Group's business consists of the purchase, management and development of income-producing, multi-family residential real estate in Germany. The current domestic and global economic downturns, and decreased business confidence have caused a sharp downturn in the demand for residential and commercial real estate in Germany. This has had a significant adverse impact on the Group's business.


The Group's financial difficulties had recently become acute. Certain notes issued by Adler RE were to become payable on 27 April 2023 and the Group did not have sufficient funds to repay these notes when they fell due. It appeared to be common ground that if the Court did not sanction the Plan, the key members of the Group would have no choice but to file for formal insolvency proceedings. It is also common ground that this is the “ Relevant Alternative” to the Plan for the purposes of section 901G(4) (below).

(1) The Debt Structure


The external debt of the Group amounts to approximately €6,100,000,000. This debt has been borrowed by various entities within the Group. The SUNs consist of the following series of notes, all of which are governed by German law:

(1) the €400,000,000 1.5% notes due in 2024 (the “ 2024 Notes”);

(2) the €400,000,000 3.25% notes due in 2025 (the “ 2025 Notes”);

(3) the €700,000,000 1.875% notes due in January 2026 (the “ January 2026 Notes”);

(4) the €400,000,000 2.75% notes due in November 2026 (the “ November 2026 Notes”);

(5) the €500,000,000 2.25% notes due in 2027 (the “ 2027 Notes”); and

(6) the €800,000,000 2.25% notes due in 2029 (the “ 2029 Notes”).


There are certain differences between the maturity dates and interest rates applicable to each series of SUNs. The key differences are set out in the table below:


Principal Amount

Coupon (% p.a.)


2024 Notes



26 July 2024

2025 Notes



5 August 2025

January 2026 Notes



14 January 2026

November 2026 Notes



13 November 2026

2027 Notes



27 April 2027

2029 Notes



14 January 2029


The terms and conditions of each series of SUNs had the effect of restricting the Group from refinancing its existing debt (apart from the 2024 Notes) or incurring additional indebtedness. The Parent Company is the guarantor of the SUNs. It is also the issuer of convertible notes with a face value of €165,000,000 which will fall due on 23 November 2023 (the “ Convertible Notes”) and a guarantor of four unsecured promissory notes issued by ADO Lux Finance S.à r.l (a vehicle for finance owned by the Parent Company) (“ ADO Lux”) with an aggregate face value of €24,500,000. These notes are known as Schuldscheindarlehensvertrag or “ SSDs”. It appears to be common ground that the SSDs also fall due for payment in 2023.


Adler RE and Consus have a number of other financial liabilities. The principal external debt obligations of Adler RE are certain senior unsecured notes with an aggregate face value of €1,100,000,000 (the “ Adler RE Notes”) which comprise the following:

(1) €500,000,000 of 1.875% senior unsecured notes due on 27 April 2023 (the “ Adler RE 2023 Notes”);

(2) €300,000,000 of 2.125% senior unsecured notes due on 6 February 2024 (the “ Adler RE 2024 Notes”); and

(3) €300,000,000 of 3% senior unsecured notes due on 27 April 2026 (the “ Adler RE 2026 Notes”).


The Adler RE Notes are senior unsecured liabilities of Adler RE. They do not benefit from any guarantees from the Parent Company or from any other member of the Group. However, since they are liabilities of a subsidiary of the Parent Company, it follows that they are structurally senior to the SUNs and must be repaid before Adler RE can distribute dividends to the Parent Company to enable it to repay its own debt. The terms and conditions of the Adler RE 2023 Notes and the Adler RE 2026 Notes are governed by German law. The Adler RE 2024 Notes are governed by New York law.

(2) The Issuer Substitution


The SUNs were originally issued by the Parent Company. On 11 January 2023 the Plan Company was substituted in place of the Parent Company as the issuer of the SUNs in accordance with the substitution procedure under the terms and conditions of the SUNs (the “ Issuer Substitution”). One of the issues which I have to consider is whether the Issuer Substitution is valid as a matter of German law. I set out the Issuer Substitution clause in section VII (below).


The Plan Creditors were notified of the completion of the Issuer Substitution on the same day by a notice published on the Luxembourg Stock Exchange. On 12 January 2023 the announcement was also posted on various clearing systems and on the Group's website. The Group also shared the same release through the media platform “EQS” (the equivalent in Germany to the regulatory news service or “RNS” in the UK) to share on other media outlets.


The Parent Company then issued...

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