Re Smile Telecoms Holdings Ltd
| Jurisdiction | England & Wales |
| Neutral Citation | [2022] EWHC 740 (Ch) |
| Court | Chancery Division |
2022 March 10; 30
Company - Reorganisation of debt - Company in financial difficulty - Foreign company - Company incorporated in Mauritius with debts governed by English law proposing restructuring plan - Plan providing for appointment of company as attorney for creditors and shareholders with authority to execute releases of claims and pass resolutions to alter company’s share capital and constitution - Whether jurisdiction to sanction scheme in absence of parallel plan in Mauritius to alter company’s constitution and share capital - Whether provisions in plan for alteration of constitution and share capital likely to have intended result - Whether plan likely to be recognised and given effect as against dissenting plan creditors in overseas jurisdictions - Whether plan to be sanctioned -
The company, which was incorporated in Mauritius, was the holding company for a group of operating companies that conducted an internet and telecommunications business in, among other places, Nigeria. The company proposed a restructuring plan between itself, certain of its creditors and its shareholders, which provided for the appointment of the company as attorney for each of the plan participants with authority to execute releases of claims by the plan creditors against the company and the passing of corporate resolutions to alter the company’s share capital and constitution. The overwhelming majority of the debts to be compromised under the plan were governed by English law and the courts of England and Wales had exclusive jurisdiction to settle any disputes arising from or connected with them. On the company’s application for an order pursuant to section 901F of the Companies Act 2006F1 sanctioning the plan, various questions arose relating to the international elements of the plan, in particular whether (1) the English court could, and if so should, sanction a plan that would lead to the alteration of the constitution and share capital of a company incorporated in Mauritius in circumstances where there was no parallel scheme or plan for the company in Mauritius, (2) the provisions of the plan would result in the alteration of the constitution and share capital of the company, and (3) the plan was likely to be recognised and given effect as against dissenting plan creditors in those jurisdictions in which the company had its main assets and business interests, in particular Nigeria where the main operating company was based.
On the company’s application to sanction the restructuring plan—
Held, granting the application, that as a matter of concept, the English courts had jurisdiction to sanction a scheme or plan that involved the alteration of the constitution and share capital of an overseas company; that the use of a parallel scheme or plan was an aspect of ensuring the international effectiveness of the English restructuring proceedings rather than being a strict requirement under the Act; that, therefore, if the necessary alterations to the constitution and share capital of an overseas company could be satisfactorily achieved in the overseas jurisdiction by an alternative process that was acceptable to the local courts without any need for a parallel scheme or plan, then the absence of such a parallel proceeding should not deter the English court from sanctioning the plan; that the expert evidence indicated that the procedure envisaged under the plan for altering the constitution and share capital using the power of attorney conferred under the plan would be acceptable and effective in Mauritius; that, further, there was a sufficient basis on which to conclude that the plan would be likely to be recognised and given effect against plan creditors in Nigeria; and that, accordingly, the court had the necessary jurisdiction and it was appropriate to sanction the plan in the exercise of the court’s discretion (post, paras 64, 70, 74, 87, 96, 99, 101).
Per curiam. In a matter such as the instant case, which raises novel points of international restructuring practice, which involves an overseas company, and in which there has been dissent expressed by some plan participants, it is important that the English court receives expert evidence of foreign law which complies with the requirements of the CPR (post, para 76).
The following cases are referred to in the judgment:
Bluebrook Ltd, In re
ColourOz Investment 2 LLC, In re
DeepOcean 1 UK Ltd, In re
Drax Holdings Ltd, In re
Gategroup Guarantee Ltd, In re
Gategroup Guarantee Ltd, In re
Gibbs (Antony) & Sons v La Société Industrielle et Commerciale des Métaux (
Hawk Insurance Co Ltd, In re
KCA Deutag UK Finance plc, In re
Mytravel Group plc, In re
NFU Development Trust Ltd, In re [
Oceanic Steam Navigation Co Ltd, In re [
Practice Statement (Companies: Schemes of Arrangement) [
Premier Oil plc, In re
Rodenstock GmbH, In re
Savoy Hotel Ltd, In re [
Smile Telecoms Holdings Ltd, In re
Smile Telecoms Holdings Ltd, In re
Tea Corpn Ltd, In re [
Telewest Communications plc, In re (No 2)
Virgin Active Holdings Ltd, In re
Virgin Active Holdings Ltd, In re
West African Gas Pipeline Co Ltd, In re
The following additional cases were cited in argument or referred to in the skeleton arguments:
English, Scottish and Australian Chartered Bank, In re [
Global Garden Products Italy SpA, In re
Magyar Telecom BV, In re
Primacom Holdings GmbH v Credit Agricole
Primacom Holdings GmbH v Credit Agricole
Sompo Japan Insurance Inc v Transfercom Ltd
Vietnam Shipbuilding Industry Group, In re
APPLICATION
The company, Smile Telecoms Holdings Ltd, the holding company of a group, proposed a restructuring plan, the purpose of which was to inject additional liquidity to prevent it from going into immediate administration, to implement a restructuring of the group’s indebtedness, and to transfer all of the economic and voting rights in the company to 966 Co SÀRL, the group’s sole super senior lender, so as to facilitate the disposal of the company’s assets and its subsidiaries on a solvent basis. Miles J [2022] EWHC 387 (Ch) gave a direction to convene a meeting of 966 Co SÀRL to consider and vote on the plan. No other meetings of creditors or shareholders were convened on the basis that they had no economic interest in the company. The plan having been approved by 966 Co SÀRL, the company applied for an order pursuant to section 901F of the Companies Act 2006 sanctioning the plan.
The facts are stated in the judgment, post, paras 3–23.
Felicity Toube QC and Charlotte Cooke (instructed by
Tom Smith QC (instructed by
Andrew Thornton QC (instructed by
The court took time for consideration.
30 March 2022. SNOWDEN LJ handed down the following judgment.
Introduction1 This is an application by Smile Telecoms Holdings Ltd (“the Company”) for an order sanctioning a restructuring plan (“the Plan”) under Part 26A of the Companies Act 2006 (“the Act”).
2 The application raises questions, in particular, about the concept of a “compromise or arrangement” in Part 26A; the effect of an order made at the convening stage under section 901C(4) of the Act that classes of creditors who have no genuine economic interest in a plan company need not be summoned to meetings to consider a plan; and questions as to the approach of the court to the exercise of its jurisdiction to sanction a restructuring plan for a foreign company that applies to its members as well as its creditors.
The factual background3 The factual background to the Plan was set out in some detail in paras 4–50 of the convening judgment of Miles J given on 12 January 2022: see In re Smile Telecoms Holdings Ltd [2022] EWHC 387 (Ch) (“the Convening Judgment”). I gratefully adopt that narrative. What follows is only a brief (and necessarily incomplete) summary.
4 The Company is incorporated in Mauritius and has an establishment and is registered as an overseas company in England. It is the holding company for a group of operating companies (“the Operating Companies” and “the Group”) that conduct an internet and telecommunications business in various countries in Africa, including in particular Nigeria, Tanzania, Uganda and the Democratic Republic of Congo (“the DRC”).
5 In the Convening Judgment, Miles J accepted that the centre of main interests (“COMI”) of the Company is not in Mauritius, but that it had been moved to England and Wales by various steps including the giving of notices to creditors in early 2021 in connection with the promotion of a previous restructuring plan under Part 26A that was sanctioned by Trower J on 19 March 2021: see In re Smile Telecoms Holdings Ltd [2021] EWHC 685 (Ch) (“the First Plan”).
6 The existing debt and capital structure of the Company essentially...
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