Castle Holdco 4 Ltd and Others v the Companies Act 2006
| Jurisdiction | England & Wales |
| Judge | Mr Justice Norris |
| Judgment Date | 23 March 2009 |
| Neutral Citation | [2009] EWHC 3919 (Ch) |
| Court | Chancery Division |
| Date | 23 March 2009 |
[2009] EWHC 3919 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANY COURT
Nos. 12011 OF 2009
Royal Courts of Justice
The Strand
London WC2A 2LL
Mr Justice Norris
APPROVED JUDGMENT
Castle Holdco 4 Limited is a Cayman Islands incorporated company which is in the ultimate control of a Delaware LLC. It is the holding company for Countrywide Plc, an English and Welsh company, and its five trading divisions which operate through nine subsidiaries in the field of estate agency, lettings, financial services, professional services and conveyancing.
Because of a sharp deterioration in the housing market, the decline in transactions has had a predictable effect on the business of the group to the extent that there has already occurred an event of default in relation to one series of security documents which underpin the company's funding. A scheme of arrangement is proposed to stabilise the business and to avert what might otherwise be a descent into an insolvency regime.
This is the company's application for the convening of meetings in relation to that Scheme of arrangement. The Scheme did not originate with the company but with a group of certain of its funders, but the proposal has received consideration by an independent committee of the Board, that is to say directors who are unconnected with the proponents of the Scheme. It is conceivable that that consideration and these present proceedings may themselves constitute an event of default under the relevant securities but it is unnecessary to decide the point.
The present application is part of a broader process to render the Scheme effective in the Cayman Islands and to secure relief in New York under Chapter 15. It is sufficient for present purposes to note that Holdco is governed by the laws of New York but that the security documentation which underpins the company's funding is governed by the laws of England and Wales.
There are three sources of funding relevant to be considered. The first is a £100 million revolving credit facility provided through lead arrangers. It is secured by a first priority fixed and floating charge over the assets of Castle Holdco and is supported by a secured guarantee from the subsidiaries.
The second funding to which my attention has been directed is a total of £470 million Senior Secured Floating Rate Notes. There are two issues of these notes. They share the first priority fixed and floating charge over the assets but, by virtue of an inter-creditor agreement, on enforcement they will rank after the revolving credit facility.
These loans are also guaranteed by the subsidiaries. The form of the facility is a global loan note of which the registered holder is BT Globenet Nominees Limited as nominee for the common depository which is the London branch of Deutschebank AG.
The third tranche of funding consists of £170 million of 9 7/8 per cent Senior Notes. These are secured in a different way by having second priority pledges over the shares in Countrywide Plc (and also over the shares in Castle Holdco). This security too is governed by the laws of England and Wales and again operates by way of a global note where BT Globenet Nominees is the nominee for the same common depository.
Shortly put, the restructuring proposed by the group of note holders consists of the recapitalisation of Castle Holdco by the injection of new equity accompanied by a Scheme under which there is a debt-for-equity swap and the issue of a new series of loan notes which will reduce the overall indebtedness of Castle Holdco from £740 million to £175 million.
As well as the debt-for-equity swap note holders are also to be given the right to participate in a further equity issue. The proceeds of the equity issue are to be used to repay the revolving credit facility. There will be a release of inter-company claims within the group, and the entire restructuring is conditional on the satisfaction of various conditions set out in full in the Explanatory Statement but to which it is unnecessary to refer.
I am concerned at this hearing to be satisfied as to the proposals for the convening of meetings. It is proposed that there be two such meetings: a meeting of the Floating Rate Note Scheme Creditors, who are defined as "persons with a beneficial interest as principal in the Floating Rate Notes held in global form" and, secondly, a meeting of the Senior Note Scheme Creditors, who are the "persons with a beneficial interest as principal" in the Senior Notes.
A preliminary question arises as to the jurisdiction to convene meetings in respect of a Caymans company. I am satisfied that under Part V of the Insolvency Act 1986 this court would have jurisdiction to wind up a Caymans company, that accordingly such a Cayman company falls within the scope of section 895(2)(b) of the Companies Act 2006. As well as having jurisdiction to take that course, I am satisfied that the court would exercise its discretion to wind up such a foreigncompany if there were a sufficient connection between that company and England and Wales as exemplified in the decision of the court in Drax Holdings [2004] 1 WLR, 1049.
I am satisfied that in the instant case there is such a connection, for the reasons set out in paragraph 56 of the witness statement of Mr Grenville Turner, namely, that Castle Holdco's main asset is its shares in Countrywide Plc which is a company incorporated in England and Wales, that Castle Holdco is tax resident within England and Wales and its centre of main interests lies in England. Furthermore, the documents which create security over its assets are governed by English law. It is as a matter of fact...
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Global Garden Products Italy S.P.A.
...and indemnity under the Credit Support Agreement and the Facilities Agreement. That approach follows a number of cases, including Re Castle Holdco [2009] EWHC 3919 and Re PrivatBank [2015] EWHC 3186 at paragraphs 9 to 16. 7 That appears also to have been the view taken by Henry Carr J at th......
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Mansard Mortgages 2007-2 Plc v Beyat Holdings Ltd
...that the first defendant was “a contingent creditor” of the first claimant, relying on authorities such as Re Castle Holdco 4 Limited [2009] EWHC 3919 (Ch), when Norris J said: “22. … As I have indicated, the notes are in each case held by a nominee for a common depository. The common depo......
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Noble Group Ltd
...to enable them to vote so as to enfranchise those with the ultimate economic interest in the debt: see e.g. Re Castle Holdco 4 Ltd [2009] EWHC 3919 (Ch) and Re Co-operative Bank Plc [2013] EWHC 4072 (Ch) at 163 In the present case, each series of Notes contains provisions enabling benefic......
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: Haya Holco 2 Plc
...owner who may obtain definitive notes is a contingent creditor for the purposes of the CA 2006: see e.g. Re Castle Holdco 4 Ltd [2009] EWHC 3919 (Ch) at [23] per Norris J; Re Co-operative Bank plc [2013] EWHC 4072 (Ch) at [23] per Hildyard J; and Re Noble Group Ltd [2019] BCC 349 (conveni......