Re Amicus Finance Plc
| Jurisdiction | England & Wales |
| Neutral Citation | [2021] EWHC 3036 (Ch) |
| Court | Chancery Division |
2021 Aug 11, 12;Nov 15
Company - Reorganisation of debt - Company in financial difficulty - Joint administrators proposing restructuring plan - Class of creditor dissenting - Administrators applying to court to sanction restructuring plan - Court having jurisdiction to sanction restructuring plan notwithstanding views of dissenting class if satisfied no member of class would be worse off than if plan not sanctioned - Whether administrators required to establish no-worse-off-outcome on balance of probabilities or some other standard -
The company became insolvent and joint administrators were appointed. The administrators decided to pursue a restructuring plan and five meetings of creditors were convened for the purposes of considering and, if thought fit, approving the restructuring plan. One of the five class meetings did not approve the plan. Under section 901G of the Companies Act 2006F1 the court had jurisdiction to sanction a restructuring plan notwithstanding the dissent of one or more class if conditions A and B were met. Condition A, which was set out in section 901G(3), required the court to be satisfied that, if the compromise or arrangement was sanctioned, the dissenting creditor would not be any worse off than it would be in the event of the relevant alternative, in this case, immediate liquidation. The administrators contended that they had to establish the “no worse off” outcome on the balance of probabilities, whereas the dissenting creditor contended that the administrators had to demonstrate that there was no real prospect or no realistic possibility of such an outcome.
On the administrators’ application for sanction of the proposed plan—
Held, granting the application, that for the purposes of section 901G(3) of the Companies Act 2006 the court had to be satisfied on the balance of probabilities that the dissenting creditor would not be any worse off under the plan than it would be under the relevant alternative; that the administrators had met that condition; that since the only class of creditor who would receive a dividend unanimously supported the plan, condition B was also satisfied; and that, in the circumstances, it was appropriate to exercise the court’s discretion to sanction the restructuring plan (post, paras 56, 57, 77–79).
In re Hurricane Energy plc [
Per curiam. The longer the period of time over which the events in question fall to be examined and assessed, the more difficult it will be to satisfy the court as to the probabilities and the easier it will be to refute the contention that the dissenting creditor will be no better off under the relevant alternative than under the plan (post, para 56).
The following cases are referred to in the judgment:
Amicus Finance plc, In re
Amicus Finance plc, In re
DeepOcean 1 UK Ltd, In re
Hurricane Energy plc, In re
Provident SPV Ltd, In re
Sunbird Business Services Ltd, In re
Telewest Communications plc (No 2), In re
Ve Vegas Investors IV LLC v Shinners
Virgin Active Holdings Ltd, In re
The following additional cases were cited in argument or referred to in the skeleton arguments:
APCOA Parking Holdings GmbH (No 2), In re
Brewer v Iqbal
Lazari Properties 2 Ltd v New Look Retailers Ltd
Noble Group Ltd (No 2), In re
Phillips v Brewin Dolphin Bell Lawrie Ltd
Rhino Enterprises Properties Ltd, In re
Steinhoff International Holdings NV, In re
APPLICATION
The joint administrators of Amicus Finance plc proposed a restructuring plan. By an order dated 9 July 2021, Snowden J allowed the administrators to convene meetings of different classes of creditor pursuant to section 901C of the Companies Act 2006 for the purposes of considering and, if thought fit, approving the plan. At a class meeting of secured creditors, Crowdstacker Corporate Services Ltd, who had a claim constituting 49.98 per cent by value of all those voting, voted against the plan. The joint administrators applied for an order sanctioning the plan under section 26A of the 2006 Act and, in particular, for the to court to invoke its power to sanction the plan under section 901G notwithstanding the dissent of Crowdstacker Corporate Services Ltd.
The facts are stated in the judgment, post, paras 1–21.
Marcus Haywood (instructed by
William Willson (instructed by
Andrew Mace (instructed by
The court took time for consideration.
15 November 2021. SIR ALASTAIR NORRIS handed down the following judgment.
1 The core business of Amicus Finance plc (“Amicus”) was the provision of short-term property finance; but it also offered other secured corporate and development finance, and through its subsidiaries also operated in specialist fields. One such specialist field was asset finance provided to small businesses by way of hire purchase and leasing; this business was conducted through Amicus Asset Finance Group Ltd (“AAF”) funded in part by an inter-company loan provided by Amicus.
2 The funding for the main business of Amicus was provided in two ways. First, individual funders (or consortia of funders) underwrote particular loans made by Amicus to its borrowers, and whilst the legal title to the loan belonged to Amicus the benefit of the loan was held under a commercial trust structure by Amicus Mortgage Trustee Ltd for the individual funder or consortium (“the AMT structure”). One such consortium was Omni Partners LLP (“Omni”) which also held a 7.5% interest in Amicus. Omni is the investment manager of Hartford Growth Fund Ltd (“HGFL”). Mr Steven Clark (“Mr Clark”) and Ms Broembsen-Kluever (“Ms Kluever”) are members of Omni and directors of Amicus. Mr Clark is also a director of the major shareholder in Amicus. Another such consortium was Capital Bridging Finance No 1 Ltd (“CBFL”) where HSBC was the senior funder, an asset management company was the mezzanine funder, and Amicus itself the junior funder.
3 In respect of loans held under the AMT structure Amicus was entitled to origination and service fees (e g, for managing the loans, collecting instalments, and effecting recoveries): and that was one of the ways in which it made its money.
4 The second means of funding the main business of Amicus was through direct borrowing by Amicus. Here it made its money by differential borrowing and lending margins.
5 Amicus was a borrowing member of the peer-to-peer lending platform operated by Crowdstacker Ltd (“Crowdstacker”). The Crowdstacker platform facilitated lending by 418 individual investors to Amicus; but a Crowdstacker associated company (Crowdstacker Corporate Services Ltd or “CCSL”) acted as security trustee under a debenture granted by Amicus to secure the loans of the individual Crowdstacker investors.
6 A similar debenture had been granted to HGTL Securitisation Company Ltd (“HGTL Securitisation”) in respect of loans to Amicus provided or originated by Hartford Growth Trading Ltd (“HGTL”) as issuer of a funding note: HGTL is a subsidiary of HGFL. An inter-creditor agreement reached in 2015 (and varied subsequently) provided that Crowdstacker and HGTL Securitisation should rank first and equally up to the amount of Crowdstackers’ secured debt, and that any extra debt due to HGTL Securitisation should be secured but subordinated. The benefit of the HGTL Securitisation debenture and the HGTL funding note now both belong to HGFL.
7 In 2018 Amicus suffered financial stress and looked for investment into its main short-term property finance business from a new strategic partner. The proposed investment into the main business envisaged a hive down of AAF by way of a sale to a new holding company for a nominal consideration. Such a hive-down required (amongst other things) Crowdstacker to release the security it held over the AAF shares by virtue of its debenture. Crowdstacker did so by a deed of release dated 12 November 2018. The deed of release recited the intended sale of the AAF shares as part of a corporate re-organisation and also recited the intention of AAF to repay the intercompany loan it had received from Amicus.
8 The proposed investment could not be brought to a successful conclusion. On 4 December 2018 the directors of Amicus acknowledged that this made the insolvency of Amicus inevitable. The process of hiving-down AAF nonetheless continued, but in an altered form under which the inter-company loan made by Amicus to AAF (then standing at just short of £12m) was released (not repaid) and the purchaser of AAF’s shares, instead of repaying the inter-company loan, assumed other obligations due from Amicus to a value equal to the released loan. I will call this “the AAF Transaction” and must return to it later. It was approved by the Amicus board on 12 December 2018 and carried into effect by agreements dated 17 December 2018.
9 On 20 December 2018 HGTL Securitisation as holder of a qualifying charge appointed Mark Fry and Kirsty Provan of Begbies Traynor (London) LLP and Jamie Taylor of Begbies Traynor (Central) LLP (“Mr Fry” “Ms Provan” and “Mr Taylor” respectively) to be administrators of Amicus. The objective...
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