Dutch company makes use of Apcoa ruling—Re DTEK Finance

Dutch company makes use of Apcoa ruling—Re DTEK Finance

Was a connection created by the governing law any less sufficient because it was made only shortly before the scheme sanction hearing?

Original news

Re DTEK Finance BV [2015] EWHC 1164 (Ch)

This case concerned an application by a Dutch company, DTEK Finance BV (DTEK), for an order under section 899 of the Companies Act 2006 (CA 2006) sanctioning a proposed scheme of arrangement between DTEK and holders of loan notes issued by DTEK.

How did the issue arise and what were the jurisdictional factors?

DTEK was incorporated in the Netherlands and was part of an energy group. Its function was to raise finance within the capital markets and distribute that finance to the group. The loan notes it issued in 2010 were governed by New York law, but following an exchange offer and consent solicitation, the governing law was changed to English law two weeks before the application to sanction the scheme. The relevant timeline is as follows:

  • 2010—loan notes issued by DTEK with New York governing law
  • 23 March 2015—exchange offer and consent solicitation launched by DTEK to agree a change of the governing law from New York to English law
  • 9 April 2015—the supplemental indenture changes the governing law to English law (according to DTEK as this is the date when over 50% of noteholders consented to the change—although there was some debate about whether New York law requires 50% or 90% approval to bind all noteholders, this was irrelevant as consent was in fact given by 91.1% of noteholders)
  • 14 April 2015—convening hearing in which the court gives permission to convene a single meeting of scheme creditors
  • 23 April 2015—creditors meeting held and approves the scheme by 91.1–92.2% (depending on whether the votes of affiliated companies are counted)
  • 24–27 April 2015—sanction hearing

Was there a sufficient connection?

Rose J considered whether there was a sufficient connection with England to justify an exercise of discretion to approve the scheme (applying Re Drax Holdings [2003] EWHC 2743 (Ch), [2004] 1 All ER 903). She referred to Re Primacom [2011] EWHC 3746 (Ch), Re Vietnam Shipbuilding [2013] EWHC 2476 (Ch) and Re Magyar Telecom [2013] EWHC 3800 (Ch) as authority that an English governing law clause is a sufficient connection for the purposes of establishing jurisdiction.

She then considered whether a conne

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.