Schemes of arrangements—pushing the boundaries of jurisdiction

Schemes of arrangements—pushing the boundaries of jurisdiction

Restructuring & Insolvency analysis: When will the courts be prepared to sanction schemes of arrangements where jurisdiction is an issue? Stefan Ramel of Guildhall Chambers says the English courts appear prepared to countenance forum shopping in a corporate context.

Original news

Re Apcoa Parking Holdings GmbH and other companies [2014] EWHC 3849 (Ch), [2014] All ER (D) 221 (Nov)

The Chancery Division sanctions schemes of arrangement in respect of the Apcoa group, a leading pan-European car park operator.

How did the issue arise?

The Apcoa group’s borrowing facilities were due to expire on 25 October 2014. The Apcoa companies considered that they could not afford to repay them, and that had been the position since September 2013. Between September 2013 and September 2014, there had been a year of difficult and fractious negotiations between creditors. Although an offer of new facilities had been made, that offer was due to expire on 25 November 2014. By late 2014, a quick restructuring of the Apcoa group’s debt was therefore necessary.

Two creditors of the nine scheme companies challenged the proposed scheme of arrangement. FMS Wertmanagement (FMS) was an assignee of a creditor originally bound by a facilities agreement made in April 2007. FMS was represented before Hildyard J at both the convening hearing (22–24 September 2014) and the sanctions hearing (20–22 and 27, 29–30 October 2014). The second scheme creditor that opposed the proposed schemes was Litespeed Master Fund Limited, acting through its New York manager. Litespeed did not appear through counsel at the hearings, but had formally written in advance of the hearings to record its opposition to the schemes and its support for the position adopted by FMS. As against those dissentient creditors, one strongly supporting creditor spoke in favour of the schemes—Centerbridge Partners. Centerbridge was the largest creditor of the Apcoa group and it also appeared, and was represented at, both hearings by counsel. Hildyard J described the adversarial position being adopted

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.