Saipem SPA & Ors v Petrofac Limited & Anor
| Jurisdiction | England & Wales |
| Judgment Date | 01 July 2025 |
| Neutral Citation | [2025] EWCA Civ 821 |
| Court | Court of Appeal (Civil Division) |
Neutral Citation Number: [2025] EWCA Civ 821
Case No: CA-2025-001239
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INSOLVENCY AND COMPANIES LIST (ChD)
Mr Justice Marcus Smith
[2025] EWHC 1250 (Ch)
IN THE MATTER OF PETROFAC LIMITED
AND IN THE MATTER OF PETROFAC INTERNATIONAL (UAE) LLC
AND IN THE MATTER OF THE COMPANIES ACT 2006 Royal Courts of Justice
Strand, London, WC2A 2LL
Date: Tuesday 1 July 2025
Before :
LORD JUSTICE SNOWDEN
LORD JUSTICE ZACAROLI
and
SIR CHRISTOPHER FLOYD
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Between :
(1)SAIPEM S.P.A.
(2)SAIPEM SINGAPORE PTE LTD
(3)SAMSUNG E&A CO., LTD
(4)SAMSUNG E&A (THAILAND) CO., LTD
Appellants
- and –
(1)PETROFAC LIMITED
(2)PETROFAC INTERNATIONAL (UAE) LLC
Respondents
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Andrew Thornton KC and Jon Colclough (instructed by Mayer Brown International LLP) for
the Appellants
David Allison KC, Henry Phillips, Ryan Perkins and Stefanie Wilkins (instructed byLinklaters
LLP) for the Respondents
Daniel Bayfield KC and Riz Mokal(instructed by Weil, Gotshal & Manges (London) LLP) for
Boundary Creek Advisors LP, FIL Investments International, Fortress Investment Group LLC,
Sparta Capital Management Ltd and Mason Capital (the “Ad Hoc Group”)
Hearing dates : 2, 3 and 4 June 2025
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Approved Judgment
This judgment was handed down remotely at 10.00 a.m. on Tuesday 1 July 2025 by circulation
to the parties or their representatives by e-mail and by release to the National Archives.
.............................
Judgment Approved by the court for handing down.
Petrofac
2
Lord Justice Snowden, Lord Justice Zacaroli and Sir Christopher Floyd:
Introduction
1.This is an appeal against the decision of Marcus Smith J, sanctioning two related
restructuring plans (collectively the “Plans”) under Part 26A of the Companies Act
2006 (“Part 26A”) in respect of two companies: Petrofac Limited (“PL”) and Petrofac
International (UAE) LLC (“PIUL”). Together PL and PIUL are the “Plan
Companies”, and with their subsidiaries they comprise the “Petrofac Group” or the
“Group”.
2.The appeal raises issues (i) as to the meaning of the “no worse off” condition for the
application of the Court’s discretion to impose a restructuring plan on a dissenting class
or classes of creditors, and (ii) as to the appropriate allocation of the benefits of the
restructuring, and the treatment of creditors who would be “out of the money” in the
relevant alternative to the plan.
3.For the reasons set out below, although we reject the appeal on the first of those
grounds, we allow the appeal on the second ground and set aside the judge’s order.
The statutory framework
4.Part 26A applies where two conditions are met (see section 901A(1) to (3)):
(1)Condition A is that the company has encountered, or is likely to encounter,
financial difficulties that are affecting, or will or may affect, its ability to carry
on business as a going concern.
(2)Condition B is that (a) a compromise or arrangement is proposed between the
company and its creditors, or any class of them, or its members, or any class of
them, and (b) the purpose of the compromise or arrangement is to eliminate,
reduce or prevent, or mitigate the effect of, any of the financial difficulties
mentioned in subsection (2).
5.Pursuant to section 901C, the Court may order a meeting of the creditors or classes of
creditors to be summoned in such manner as the Court thinks fit, although by section
901C(4), the Court can exclude from participation in meetings creditors who have no
“genuine economic interest in the company”.
6.The Court’s discretion to sanction a plan under Part 26A is found in section 901F(1):
“If a number representing 75% in value of the creditors or class
of creditors or members or class of members (as the case may
be), present and voting either in person or by proxy at the
meeting summoned under section 901C, agree a compromise or
arrangement, the court may, on an application under this section,
sanction the compromise or arrangement.”
7.By section 901G, however, the Court may sanction a plan even though one or more of
the classes fails to approve it by the requisite majority:
Judgment Approved by the court for handing down.
Petrofac
3
“(1) This section applies if the compromise or arrangement is
not agreed by a number representing at least 75% in value of a
class of creditors or (as the case may be) of members of the
company (“the dissenting class”), present and voting either in
person or by proxy at the meeting summoned under section
901C.
(2) If conditions A and B are met, the fact that the dissenting
class has not agreed thecompromise or arrangement does not
prevent the court from sanctioning it under section 901F.
(3)Condition A is that the court is satisfied that, if the
compromise or arrangement were to be sanctioned under section
901F, none of the members of the dissenting class would be any
worse off than they would be in the event of the relevant
alternative (see subsection (4)).
(4) For the purposes of this section “the relevant alternative” is
whatever the court considers would be most likely to occur in
relation to the company if the compromise or arrangement were
not sanctioned under section 901F.
(5) Condition B is that the compromise or arrangement has been
agreed by a number representing 75% in value of a class of
creditors or (as the case may be) of members, present and voting
either in person or by proxy at the meeting summoned under
section 901C, who would receive a payment, or have a genuine
economic interest in the company, in the event of the relevant
alternative.”
The Plan Companies
8.PL was incorporated and registered in Jersey in 2002. Its shares are listed on the London
Stock Exchange. It is the ultimate parent company of the Group, and primarily operates
as a holding company.
9.PIUL was incorporated and registered in Sharjah, UAE, in 2008. 1% of its shares are
owned by PL and 99% are owned by Petrofac International Limited, a wholly-owned
subsidiary of PL.
10.The Group is a leading international service provider to the energy industry, with
expertise in the design, construction and operation of energy facilities. It operates across
29 countries. PIUL is the Group’s principal operating company.
Background to the Plans
11.The Group first encountered serious financial difficulties in 2017, when PL and others
were investigated by the Serious Fraud Office (“SFO”) for suspected bribery,
corruption and money laundering. PL pleaded guilty to seven offences of failing to
prevent bribery by associated persons, and paid a fine of £70 million. Notwithstanding
an extensive corporate governance review and an overhaul of its compliance systems
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