The Companies Act 2006: an : Codere Finance (Uk) Ltd

JurisdictionEngland & Wales
CourtChancery Division
JudgeMr. Justice Newey
Judgment Date17 December 2015
Neutral Citation[2015] EWHC 3778 (Ch)
Date17 December 2015

[2015] EWHC 3778 (Ch)




Rolls Building

Royal Courts of Justice


Mr. Justice Newey

In The Matter of the Companies Act 2006: An In The Matter of: Codere Finance (Uk) Limited

Mr. D. Allison QC and Mr. R. Perkins (instructed by Clifford Chance LLP) appeared on behalf of the Scheme Company.

Mr. A. Zacaroli QC and Miss C. Cooke (instructed by Linklaters) appeared on behalf of the Ad Hoc Committee.

Mr. Justice Newey

I have before me an application for an order sanctioning a scheme of arrangement under Part 26 of the Companies Act 2006.


The application is made by Codere Finance (UK) Ltd., an English incorporated subsidiary of Codere SA, a Spanish company. Codere SA is the ultimate parent of a group of companies that carries on business by way of gaming and similar activities in Latin America, Italy and Spain. Codere SA's shares are listed on a number of Spanish stock exchanges.


Financing for the group has principally been provided under a senior facilities agreement and, more importantly for present purposes, by the issue of notes. Two series of notes have been issued by Codere Finance (Luxembourg) SA, a Luxembourg incorporated subsidiary of Codere SA. Both series of notes are governed by New York law, guaranteed by Codere SA and other group companies and subject to an English law intercreditor agreement originally made in 2005.


As at 28 th August of this year, the group had outstanding gross debts of some €1,460 million. The notes accounted for the great majority of that indebtedness: about €1,21 million. The group is not in a position to meet all its debts.


Negotiations with a view to achieving a restructuring began more than two years ago. Consideration was given to invoking the restructuring mechanisms available in jurisdictions other than this one. It was concluded, however, that the available options would involve some form of insolvency proceedings. That, it was thought, could put at risk licences on which the group depends and so diminish its value. The view was thus taken that the best course was to seek to use the scheme jurisdiction that exists in England and Wales. As was stressed to me by Mr. Antony Zacaroli QC, who appears with Miss Charlotte Cooke for an ad hoc committee of creditors, the use of the English scheme jurisdiction has been driven from the outset by creditors.


Codere Finance (UK) Ltd. (which I shall call "the company") was acquired to that end. Its shares were acquired by Codere SA in October of last year, and in February of this year it agreed to assume a primary, joint and several obligation in respect of all Codere Finance's obligations as regards the notes. The accession of the company as a co-obligor in relation to the notes was undertaken pursuant to an instruction from Codere SA as the company's sole shareholder and with the agreement of more than 97 percent of the noteholders.


The restructuring that the scheme is intended to achieve is complex. It relates to both the obligations under the notes and the structure of the group. In the broadest of terms, it provides for the existing notes to be cancelled in exchange for shares and other notes; for €400 million of new money to be injected; and for the hive down of Codere SA's assets to a new Spanish company and the subsequent interposition of two Luxembourg-registered entities between Codere SA and the new Spanish company.


Implementation of the scheme is to be conditional on the company obtaining an order recognising the scheme and its effects under Chapter 15 of the US Bankruptcy Code. In that regard, a hearing has been arranged for next Tuesday. Chapter 15 approval is a non-waivable condition precedent.


The scheme is expected to result in noteholders receiving recoveries equal to at least 47 percent of liabilities. In contrast, the group has been advised that the recovery rate could drop to zero if the scheme does not proceed. In other words, scheme creditors could lose some €600 million.


That being so, it is not surprising that the scheme has received strong endorsement from noteholders. At the meeting held on 14 th December 140 creditors, with claims totalling US$ 1,370,324, 488 (or 98.78 percent of the total indebtedness), voted in favour of the scheme and not a single creditor voted against it. The chances are that the scheme would have enjoyed even greater support but for the fact that the company has not succeeded in identifying some 1.22 percent of the scheme creditors.


Guidance as to the approach that the court should take when deciding whether to sanction a scheme of...

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14 cases
  • Re:Ballantyne RE Plc & The Companies Act 2014
    • Ireland
    • High Court
    • 6 June 2019
    ....... . 5 Against that background, Ambac Assurance UK Limited (‘Ambac’), which is one of the two financial guarantors of the notes issued under the ... 2019 and noted that, as stated in that document, the top 7 of the 25 largest international finance exposures outstanding for Ambac as at 31st March 2017, each individually exceeded Ambac's net ... Magyar Telecoms BV [2015] 1 BCLC 418 ; Re Noble Group Ltd [2018] All ER (D) 100 ; Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch) and Re Zlomerex International Financial SA [2015] 1 ......
  • Noble Group Ltd
    • United Kingdom
    • Chancery Division
    • 14 November 2018
    ...the assistance of the Court with the support of, and in order to achieve the best result for, its creditors. In Re Codere Limited [2015] EWHC 3778 (Ch), Newey J indicated, at [18], “18. In a sense, of course, what was done in [ AI Scheme Limited [2015] EWHC 1233 (Ch) and [2015] EWHC 2038......
  • Gategroup Guarantee Ltd
    • United Kingdom
    • Chancery Division
    • 17 February 2021 a number of cases, provided that in all the circumstances it constitutes (in the words of Newey J in Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch)) “good forum shopping”. The co-obligor structure is not itself necessary to give this court jurisdiction: it is necessary to overcome the......
  • Indah Kiat International Finance Company B.v and Another
    • United Kingdom
    • Chancery Division
    • 12 February 2016
    ...that the Scheme (including the release of the Parent) should be recognised in the United States under Chapter 15: see e.g. Re Codere Finance (UK) Limited [2015] EWHC 3778 (Ch). 95 On that footing, it seems to me that the questions raised by APPIO of whether it is appropriate to use the sche......
  • Request a trial to view additional results
1 firm's commentaries
  • "There Can Sometimes Be Good Forum Shopping"
    • United Kingdom
    • JD Supra United Kingdom
    • 21 March 2016
    ...Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch), 17 December 2015, the English High Court sanctioned a scheme of arrangement involving an English company deliberately acquired by a foreign parent to attract the court's jurisdiction, and in doing so considered the application of the Recast ......
1 books & journal articles
    • Singapore
    • Singapore Academy of Law Journal Nbr. 2017, December 2017
    • 1 December 2017
    ...Morris & Collins on the Conflict of Laws (Lord Collins of Mapesbury et al eds) (Sweet & Maxwell, 15th Ed, 2012) at para 31–097. 37[2015] EWHC 3778 (Ch). 38 Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch) at [13]. 39 Re Codere Finance (UK) Ltd [2015] EWHC 3778 (Ch) at [15]–[16]. 40 Re Coder......

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