Vol 21 (2024) - Issue 4

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A Look at Re Nasmyth Group Limited (Re Companies Act 2006) [2023] EWHC 988 (Ch)

Synopsis
Re Nasmyth Group Limited is the first case in England & Wales in which the Court did not sanction a proposed restructuring plan under Part 26A of the Companies Act 2006 where there was a dissenting creditor class but the conditions for the Court to exercise its discretion to effect a cross-class cram down were satisfied.
The Court highlighted that there is no presumption in favour of sanction because such conditions were satisfied and noted there were certain factors that the Court should consider when exercising its discretion. Specific factors that were referred to include the arguments of dissenting creditors and whether there is any blot or defect in the restructuring plan which may hinder its operational effectiveness. In consideration of the arguments submitted by the dissenting creditors (in particular, the dissenting sole referential creditor, HMRC) the Court found inter alia that the proposed restructuring plan was reliant upon the plan company and its subsidiaries agreeing time-to-pay rrangements with HMRC after its sanction. Accordingly, the plan company’s failure to agree such time-to-pay arrangements prior to putting forward the restructuring plan effectively acted as a roadblock (or blot) that prevented the restructuring plan taking effect in the manner in which the plan company and its creditors intended and so it was not sanctioned.