Hibu Finance (UK) Ltd, Hibu Connect SAU, and Others
Jurisdiction | England & Wales |
Judge | Mr. Justice Norris |
Judgment Date | 24 January 2014 |
Neutral Citation | [2014] EWHC 370 (Ch) |
Court | Chancery Division |
Date | 24 January 2014 |
Docket Number | Nos. 3073 to 9080 of 2013 |
[2014] EWHC 370 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
Rolls Building
Royal Courts of Justice
Mr. Justice Norris
Nos. 3073 to 9080 of 2013
Mr. W. Trower QC and Mr. T. Smith (instructed by Herbert Smith Freehills LLP) appeared on behalf of the Applicants.
Mr. I. Dearing and Mr. W. Chauhdry appeared on behalf of the Respondents.
(As approved by the Judge)
By this application eight companies in the Hibu Group apply for orders convening scheme meetings to carry forward an intended scheme of arrangement with certain creditors as part of a restructuring of the Group overall. The Group business was principally the production of traditional printed business directories in the United Kingdom, the USA, Spain and parts of South America; but that business has of late been failing and it is recognised that it is no longer a viable business, so the Group strategy is to refocus on the provision of what are called "digital marketing services". This will involve reshaping the business model and undertaking some financial restructuring. It is unnecessary to descend into the detail, much of which will be apparent from the reports of administrators who have been appointed to the principal Group company.
The key features which it is necessary for those taking an overview of the scheme to bear in mind are these. The principal Group funding of some £2.3 billion is provided under a Senior Facilities Agreement entered into on the 30 th November 2009 (which I will call the 2009 SFA), and was itself a restructuring of earlier facilities. The 2009 SFA consists of three sterling term loan facilities, two US dollar term loan facilities and two euro term loan facilities. Within these facilities there are different repayment terms. One term loan is amortised, others are payable on maturity. There are different repayment dates for differing facilities and there are different interest rates charged in relation to the differing facilities, But having been referred in evidence and argument to the detail of the differencesI can say that I take the view that in the context of the facilities overall the differences are small. Each of the facilities is underpinned by the same security and under the terms of the 2009 SFA and associated documents ranks pari passu in the event of insolvency. There are inter-creditor arrangements between the subscribers to the 2009 SFA which ensure that any recoveries made by any of them are shared pro rata between the differing providers.
Clause 40 of the 2009 SFA provides that it and any non-contractual obligations arising out of it are governed by English law. Clause 41 of the 2009 SFA provides that the courts of England have non-exclusive jurisdiction to settle any dispute arising out of or in connection with the 2009 SFA, and for that purpose "dispute" is given a very broad meaning by the finance documents.
The borrowers under the 2009 SFA are three finance subsidiaries. One is an English company, Hibu Finance Ltd; one is a United States entity, Hibu (USA) LLC; and one is a Spanish company, Hibu Connect SAU. They entered into the primary obligations under the 2009 SFA. But those primary obligations are guaranteed in commercial terms by each Group company that utilises the finance facilities that are provided, and, as between those guarantees, there are cross-guarantee arrangements, so that if one was to provide a thumbnail sketch one would say that each lender has an actual or contingent claim against each company benefiting from the 2009 SFA and ranks pari passu with every other lender in the event of an insolvency in that company. The five other companies who are making applications for the convening of meetings today are such guarantors. They are all incorporated under the laws of the United States.
The principal Group company is already in administration. Other Group members are effectively insolvent and would also be in an insolvency regime if the lenders under the 2009 SFA were to exercise their rights in respect of the events of default which have undoubtedly occurred. However there has been a temporary waiver of those rights, which waiver will expire on the 31 st March 2014. The breathing space afforded by that arrangement has been used to negotiate a...
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