Vol 11 (2014) - Issue 6

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In the matter of APCOA Parking (UK) Ltd & Ors [2014] EWHC 997 (Ch)

Introduction
Over the past few years the question of whether the English Courts have jurisdiction to sanction a scheme of arrangement, in relation to a foreign company, has been central to the European restructuring market.
The remit of the English Courts' jurisdiction to sanction a scheme of arrangement in relation to a nondomestic company has been expanded by the recent decision of Hildyard J in APCOA Parking (UK) Ltd & Ors [2014] EWHC 997 (Ch).
Hildyard J, as discussed below, was faced with the issue of whether the English Courts have jurisdiction to sanction a scheme in relation to a foreign company with its COMI outside the UK and where the sole basis for establishing jurisdiction was as a result of amendments to the governing law and jurisdiction clauses of the company's principal finance documents to English law (the 'Scheme').

Factual background
The Scheme related to nine companies (the 'Scheme Companies') that formed part of the German based APCOA Parking Group ('APCOA'). APCOA is the leading European car park operator that offers over 1.3 million parking spaces at some 7,413 locations, and has over 4,500 employees. APCOA is centrally managed from Germany by its holding company.
There are in total 39 subsidiaries in the group that are located in 12 countries. Out of the nine Scheme Companies, only two companies were incorporated in England. Of the remaining companies, two were incorporated in Germany, two in Norway and one each in Belgium, Austria and Denmark (the 'Foreign Scheme Companies').
Each of the Scheme Companies was a borrower under a facilities agreement dated 23 April 2007 that was, at inception, governed by German law and subject to the exclusive jurisdiction of the courts of Frankfurt/Main (the 'Facilities Agreement'). The Facilities Agreement was due to mature on 25 April 2014 (the 'Maturity Date') which was prior to the completion of the group's ongoing restructuring. In order for the Maturity Date to be extended under the terms of the Facilities Agreement unanimous consent of all of the creditors was required. As a result of this, the group sought to implement the Scheme as a way of extending the Maturity Date without having to obtain unanimous consent. The Scheme only required the majorities prescribed by Part 26 of the Companies Act 2006 ('CA 2006') for the Maturity Date to be extended.
Prior to proposing the Scheme the governing law and jurisdiction clauses of the Facilities Agreement were amended to English law and the English Courts respectively. The amendments to the governing law and jurisdiction were effected by the requisite majority of creditors as set out under specific provisions contained in the Facilities Agreement. The group obtained uncontested evidence of local law that stated that the amendments to the Facilities Agreement and an order sanctioning the Scheme would be recognised in each of the jurisdictions where the Foreign Scheme Companies were incorporated.

Jurisdictional issue
The English Courts' jurisdiction to sanction a scheme of arrangement is found in s.895 CA 2006 and relates to whether or not the English Courts have jurisdiction to wind up the company in question. 'Company' for the purposes of the CA 2006 is defined as 'any company liable to be wound up under the Insolvency Act 1986'. Sections 220 and 221(1) of the Insolvency Act 1986 ('IA 86') give the English Courts the power to wind up foreign companies.
The IA 86 does not itself set out any jurisdictional restrictions that refer to the company's place of incorporation, centre of main interest ('COMI') or establishment. The English Courts however have set out three conditions for the making of a winding up order in relation to a foreign company. Of particular importance to the issue arising out of the Scheme is the condition that the foreign company has a sufficiently close connection with England. For further analysis of the law relating to the conditions for the winding up of a foreign company and their application in the context of schemes of arrangements see the decision of Collins J in Re Drax Holdings Ltd [2004] 1 BCLC 10.