Metinvest BV
| Jurisdiction | England & Wales |
| Judge | Mr Justice Mann |
| Judgment Date | 24 January 2017 |
| Neutral Citation | [2017] EWHC 178 (Ch) |
| Date | 24 January 2017 |
| Court | Chancery Division |
| Docket Number | Case No: CR-2017-000341 |
[2017] EWHC 178 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr Justice Mann
Case No: CR-2017-000341
MR D ALLISON, QC appeared on behalf of the Appellant.
APPROVED JUDGMENT
This is an application for an order convening two separate meetings of creditors of the scheme company Metinvest BV, a Dutch company, so that meetings can be held to consider and, if thought fit, approve a scheme of arrangement pursuant to the Companies Act 2006, part 26. I am spared from having to set out a lot of the detailed background to this case by the fact that there have been at least two previous schemes relating to this company, relating to one of the classes of creditors; that is to say the noteholders. The judgments delivered in those matters are already set out at the relevant part of the background which, by and large, I do not intend to repeat. Those previous schemes were schemes under which there was a moratorium.
The judgments in question are all entitled Re Metinvest BV, and their neutral citation numbers are as follows [2016] EWHC 79 (Ch), Proudman J; [2016] EWHC 372 (Ch), J Asplin; [2016] EWHC 1531 (Ch), Newey J; [2016] EWHC 1868 (Ch), Arnold J. In those judgments, judgments were given ordering meetings of the class of noteholders and, ultimately, sanctioning the schemes which were, as I say, basically moratoriums.
The background to the matter is that the scheme company is the finance-raising arm of a Ukrainian group which is a very large coal and steel producer. It is suffering from severe financial difficulties caused, not least, by the warlike conditions in the east of the country. It has not been able to satisfy liabilities under two classes of debts, each of those classes being debts which are proposed should fall within the scheme.
The classes are as follows. The first class I will call the notes or noteholder class. That class comprises three sets of unsecured notes — 2016, 2017 and 2018 notes. It is proposed that they, together, should form one class for the purpose of a class meeting. The second class are known in the jargon of this case as the PXF facilities, which are four syndicated facilities with an outstanding aggregate principal amount of over US$ 1 billion. Likewise, the liabilities outstanding on the notes are in excess of US$ 1 billion.
As will appear, it will be unnecessary for me to distinguish between various elements within those proposed classes. There have been defaults under various elements of those classes of liabilities with the effect, when combined with cross defaults, that the liabilities have fallen due or can be made to fall due. The company is unable to pay them.
The overall purpose and effect of the scheme of arrangement which is proposed is that the liabilities should be postponed to a future date in a few years' time, details of which do not matter for the purposes of this hearing. In the case of each of the classes of liabilities, it is proposed to postpone payment by substituting new liabilities under which the principal due will be, putting it broadly, the outstanding capital and outstanding interest under each of the various facilities, and the new liabilities will fall due in a few years' time. That, then, is the scheme which is proposed.
In order to propound the scheme, it is proposed to call meetings of two classes; that is to say the noteholders, as one class, and the PXF facility beneficiaries as another class. I am concerned today principally with class issues, although there are various formalities about which I must also be satisfied. As, Mr Allison QC for the applicant company says, the main concern is they should be matters of class.
The law, in relation to establishing the correct classes for scheme meetings, has been set out in a myriad of cases and was considered by Proudman J in the first of the four previous Metinvest cases to which I have referred. I do not propose to add to the long list of authorities saying essentially the same thing by saying it again myself. Suffice it to say, the law is extensively set out by Mr Allison in his very full skeleton argument and is summarised by Proudman J in her judgment and I adopt those summaries.
With that in mind, I turn to consider briefly whether or not the classes have been, on the present evidence, correctly constituted. Again, as a matter of practice, although not as a matter of technicality, a large part of the work on this point has already been done by Proudman J in her case when she considered whether the noteholders under the 2016, 2017 and 2018 notes were a valid single class for the purposes of the scheme which was before her. She considered, for the reasons given in her judgment, that they were. That point was revisited by Newey J, when he had to consider the convening of meetings on the second moratorium scheme and he saw no reason to disagree.
I have considered those judgments and I have considered the material for myself, because it is a fresh decision for me to take. I have come to the conclusion that those noteholders are well within the definition of those who can properly constitute a class for the reasons given by Proudman J and, effectively, adopted or followed by Newey J in his decision.
There...
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