Metinvest BV (Applicant)
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Arnold |
| Judgment Date | 30 June 2016 |
| Neutral Citation | [2016] EWHC 1868 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: CR-2016-000129 |
| Date | 30 June 2016 |
[2016] EWHC 1868 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
COMPANIES COURT
The Rolls Building
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr. Justice Arnold
Case No: CR-2016-000129
Mr. David Allison QC and Mr. Stephen Robbins, (instructed by Allen & Overy LLP) for the Applicant.
JUDGMENT APPROVED
This is an application by Metinvest BV ("the Scheme Company") for sanction of a scheme of arrangement referred to as the Second Moratorium Scheme pursuant to Part 26 of the Companies Act 2006.
It is important to note at the outset that the Second Moratorium Scheme is in very similar terms to a previous scheme sanctioned by this court on 29 January 2016, referred to as the First Moratorium Scheme. As their names imply, both schemes involve moratoria of debts of the Scheme Company. The debts in question are those under three series of Eurobonds issued by the Scheme Company, those falling into three classes referred to as the 2016 Notes, the 2017 Notes and the 2018 Notes. The Scheme Company is already in default in respect of each of those classes of Notes. In particular, it has defaulted on the 2016 Notes and that has triggered cross-defaults on the 2017 Notes and the 2018 Notes.
In addition to its indebtedness under the Notes, which was the subject of the First Moratorium Scheme and is proposed to be the subject of the Second Moratorium Scheme, the Scheme Company also has indebtedness under pre-export financing facilities, referred to as the PXF Facilities, with four syndicates of international commercial banks. Again, the Scheme Company is in default of its obligations under the PXF Facilities.
However, the PXF Facilities stand in a different position to the indebtedness under the Notes. The reason being that, in relation to the PXF facilities, the Scheme Company was able to enter into a contractual standstill arrangement until 1 December 2015, and then there was a further extension of the standstill until 27 May 2016. At present, the Scheme Company is seeking a further extension to the standstill agreement and it is anticipated that that will be agreed.
Accordingly, neither the First Moratorium Scheme nor the Second Moratorium Scheme dealt with the position under the PXF Facilities.
The moratorium under the First Moratorium Scheme provided for a moratorium on enforcement action by the holders of the Notes until 27 May 2016 in order to maintain the stability of the Scheme Company and its subsidiaries while the Scheme Company negotiated a restructuring proposal with an ad hoc committee of noteholders referred to as the Noteholder Committee.
Shortly before the expiry of the First Moratorium, non-binding heads of terms for a restructuring of both the Notes and the PXF Facilities was agreed.
Against that background, the purpose of the Second Moratorium Scheme is to continue the moratorium on enforcement action by noteholders until 30 September 2016, subject to extension to 30 November 2016 in certain circumstances or to early termination in other circumstances. Again, the purpose of the Second Moratorium is to maintain the stability of the group during the period in which the parties agree the documentation for and implementing the restructuring proposal set out in the non-binding heads of terms. Accordingly, all that the Second Moratorium Scheme seeks to do is to delay enforcement action by noteholders in order to enable a consensual restructuring of the indebtedness of the Scheme Company in accordance with the non-binding heads of terms.
It will be appreciated from what I have said before that the First Moratorium Scheme was considered by and sanctioned by this court. In the usual way, the First Moratorium Scheme was considered by the court in two stages.
First, there was an application for an order convening a meeting of creditors. That came before Proudman J on the 13 January 2016. On that occasion there had been written objections from some holders of the 2016 Notes. As a result, Proudman J gave detailed consideration to two issues in particular.
The first was whether it was appropriate for there to be a single class of creditors meeting in a single meeting in order to consider whether...
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...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 scheme......