Van Gansewinkel Groep B.v, and Others (Applicants)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Snowden |
| Judgment Date | 22 July 2015 |
| Neutral Citation | [2015] EWHC 2151 (Ch) |
| Docket Number | Claim Nos. 4317, 4318, 4319, 4320, 4321 and 4322 of 2015 |
| Court | Chancery Division |
| Date | 22 July 2015 |
In the Matter of
And in the Matter of the Companies Act 2006
[2015] EWHC 2151 (CH)
Mr Justice Snowden
Claim Nos. 4317, 4318, 4319, 4320, 4321 and 4322 of 2015
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building
Fetter Lane
London EC4A 1NL
David Allison QC (instructed by Freshfields Bruckhaus Deringer LLP) for the Applicants
Hearing date: 14 July 2015
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Snowden Introduction
On Tuesday 14 July 2015, after a hearing lasting most of the day, 1 made an order sanctioning schemes of arrangement under Part 26 of the Companies Act 2006 ("the Schemes") in respect of five Dutch companies and one Belgian company in the group headed by Van Gansewinkel Groep B.V. ("the Scheme Companies'" and "the Group"), The Scheme Companies do not have their centre of main interests (COMI), or any establishment, or any significant assets in England. The Schemes are part of a restructuring of the Group's financial indebtedness, the terms of which are governed by English law. The restructuring was urgently needed as the Group was unable to comply with its financial covenants under its existing financing agreements and was operating pursuant to limited waivers and forbearances from its creditors.
When I made the order sanctioning the Schemes, 1 indicated that I would give my reasons in writing at a later date, which 1 now do.
Before turning to the detail of the Schemes, I wish to say a few introductory words about schemes of arrangement of this type and the procedure for dealing with them. 1 do so as a preface to my consideration of some of the jurisdictional issues that arose in this case and the procedure that was adopted, which, for the reasons that 1 will explain, 1 do not consider to have been entirely satisfactory.
Cross-border schemes of arrangement
In recent years schemes of arrangement have been increasingly used to restructure the financial obligations of overseas companies that do not have their COMI or an establishment or any significant assets in England. In such cases, the English court has been satisfied that neither the EC Insolvency Regulation (EC 1346/2000) nor the EC Judgments Regulation (EC 44/2001) (now recast and replaced by Regulation EU 1215/2012 with effect from 10 January 2015) has prevented the court from having jurisdiction; and a sufficient connection with England to justify the exercise of the scheme jurisdiction of the English court has been found to exist as a result of the fact that the debt obligations which are to be restructured under the scheme are governed by English law. The legal issues arising in such cases were first considered in depth by Briggs J in Re Rodenstock GmbH [2011] EWHC 1104 (Ch), [2011] Bus. L.R. 1245, [2012] BCC 459 ("Rodenstock") and were most recently tested before Hildyard J in Re Apcoa GmbH [2014] EWHC 3849 (Ch), [2015] Bus. L.R. 374, [2015] BCC 142 ("Apcoa") (a case in which permission to appeal to the Court of Appeal was granted, but the appeal was subsequently compromised).
The use of schemes of arrangement in this way has been prompted by an understandable desire to save the companies in question from formal insolvency proceedings which would be destructive of value for creditors and lead to substantial loss of jobs. The inherent flexibility of a scheme of arrangement has proved particularly valuable in such cases where the existing financing agreements do not contain provisions permitting voluntary modification of their terms by an achievable majority of creditors, or in cases of pan-European groups of companies where co-ordination of rescue procedures or formal insolvency proceedings across more than one country would prove impossible or very difficult to achieve without substantial difficulty, delay and expense.
In circumstances such as these, there is a considerable commercial imperative, and indeed pressure, upon the court to approve a scheme of arrangement. It should be emphasised, however, that even where the scheme in question has the support of an overwhelming majority of the creditors who are to be subject to it, the court does not act as a rubber stamp. Whether or not the scheme is opposed, the court requires those presenting the scheme to bring to its attention all matters relevant to jurisdiction and the exercise of its discretion. The court will then consider carefully the terms and effect of what is proposed, whether it has jurisdiction, and whether it is appropriate to exercise such jurisdiction. That is particularly the case when the court is considering a scheme for an overseas company which does not have its COM1 or an establishment in England, where jurisdictional issues necessarily arise, and where recognition of the scheme in other countries will be important.
The Scheme Companies
There were six separate but inter-conditional Schemes in respect of the Scheme Companies. The first of these companies. Van Gansewinkel Groep B.V. ("VGG") is a management holding company. It is the contractual party to several key contracts and it performs the head office function for the Group, which carries on a waste management business across the Netherlands, Belgium and Luxembourg. The second Scheme Company, Van Gansewinkel Nederland B.V. ("VGN") is the principal operating subsidiary of VGG and has approximately 1,500 employees and numerous operating contracts. Robesta Vastgoed B.V. ("RV") operates as a real estate holding company. Riebeeck Olie Amsterdam 1 B.V. ("ROA"), Van Gansewinkel Belgie NV ("VGB") and Van Gansewinkel Industrie B.V. ("VGI") are all investment holding companies. As 1 have already stated, none of the Scheme Companies is an English company and none of them has its COMI, an establishment, or any substantial assets in England or Wales. I was told by Mr, Allison QC, who appeared for the Scheme Companies, that it is likely that the COMI of each of the Scheme Companies is located in their respective country of incorporation.
The financial obligations of the Scheme Companies
The Schemes concern the obligations of the Scheme Companies under an Existing Senior Facilities Agreement and part of VGG's liabilities under four Hedging Agreements entered into in order to hedge the floating interest rate liabilities under the Existing Senior Facilities Agreement.
Prior to the Schemes, the facilities under the Existing Senior Facilities Agreement included a number of fully drawn Term Facilities and a Revolving Facility amounting in total to just over €800 million as shown in the table below.
| Facility | Borrower(s) | Total Commitments | Total Outstanding | |||||||||
| 2013 Tranche Bl term rcicilily | VGG | €60.265,344.87 | Fully drawn | ROA | €4,990,816.62 | Fully drawn | VGI | €15,804.252.44 | Fully drawn | Total | €81,060,413.93 | Fully drawn |
| 2013 Tranche B2 Term Facility | VGG | €38,239,914.51 | Fully drawn | |||||||||
| 2013 Tranche B3A Term Facility | VGG | €389,316,307.16 | Fully drawn | |||||||||
| 2013 Tranche B3B Term Facility | RV | €10,571,566.54 | Fully drawn | VGN | €31,285,314.96 | Fully drawn | Total | €41,856,881.50 | Fullv drawn | |||
| 2013 Tranche B3C1 Term Facility | VGG | €71,854,664.77 | Fully drawn | |||||||||
| 2013 Tranche B3C2 Term Facility | VGG | €42,197,134.32 | Fully drawn | |||||||||
| 2013 Tranche B3D Term Facility | VGB | €21,038,527.87 | Fully drawn | |||||||||
| 2013 Tranche C Term Facility | VGG | €90,713,349.51 | Fully drawn | |||||||||
| 2013 Revolving Facility | VGG | €69,976,185.64 | €20,756,237 |
VGG was party to four Hedging Agreements with an aggregate notional amount of €600 million in order to hedge the floating interest rate liabilities under the Existing Senior Facilities Agreement. These Hedging Agreements were partially terminated (as to 50% of the notional amount hedged under each agreement) prior to the scheme meetings and the ascertained claims arising from the partial termination were voted at the scheme meetings.
The obligations of the Scheme Companies under the Existing Senior Facilities Agreement and the Hedging Agreements were guaranteed by each of the other Scheme Companies (and one additional Group company, Van Gansewinkel NV) and were secured by a comprehensive security package over the assets of the Group.
The Existing Intercreditor Deed provided that the liabilities owed by the Companies under the Existing Senior Facilities Agreement and the Hedging Agreements ranked pari passu in all circumstances. The Existing Senior Facilities Agreement, the Hedging Agreements and the Existing Intercreditor Deed were each governed by English law.
The Scheme Creditors
The creditors to be affected by the Schemes ("the Scheme Creditors") were:
i) the creditors in respect of the term loans advanced under the Existing Senior Facilities Agreement ("the Term Scheme Creditors");
ii) the creditors in respect of the Revolving Facility under the Existing Senior Facilities Agreement ("the RCF Scheme Creditors"); and
iii) the creditors under the Hedging Agreements in respect of their ascertained claims arising from the partial termination of each of the Hedging Agreements ("the Hedging Scheme Creditors").
The debtor-creditor relationships under the parts of the Hedging Agreements which had not been terminated were not subject to the Schemes. Instead they will continue to hedge the floating interest rate liabilities under the debt reinstated under the Schemes by reference to the lower notional amount of €300 million.
The financial difficulties of the Group
The Group's revenue fell due to,...
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