Vol 8 (2011) - Issue 4

Article preview

Re Rodenstock GmbH [2011] EWHC 1104 (Ch)

The decision of Mr Justice Briggs in Re Rodenstock GmbH [2011] EWHC 1104 (Ch) follows several recent cases in which solvent foreign companies have been restructured using schemes of arrangement under Part 26 of the Companies Act 2006 (the '2006 Act'). The decision is important because it is the first to consider in detail:

i) the effect on the court’s jurisdiction created by the passing into English law of the Judgments Regulation3 and the Insolvency Regulation; and

ii) whether an English law legal relationship is a sufficient connection for the purposes of exercising the court’s jurisdiction to sanction a solvent scheme. For the reasons set out below, the Judge concluded that the court had jurisdiction to sanction a solvent scheme in respect of a foreign company and, in the exercise of his discretion, he sanctioned the Scheme.

The jurisdictional issues arose from the following facts:

i) Rodenstock is incorporated in Germany and has its centre of main interest there;

ii) Rodenstock has no establishment in the UK nor any assets in the UK likely to be affected by the Scheme;

iii) there is no comparable jurisdiction under German law to sanction solvent schemes;

iv) a recent decision of a German court5 has declined to recognise an English judgment sanctioning a solvent scheme pursuant to the Judgments Regulation.



Rodenstock is the main operating company in the Rodenstock group, which is Europe’s fourth largest manufacturer of spectacle lenses and frames. Its headquarters are in Munich, its main production facilities are in Europe and Thailand and its products are, outside Germany, distributed across the globe by Rodenstock’s subsidiaries. Rodenstock’s turnover is approximately EUR 258 million, of which some EUR 4 million is generated from customers in England. Rodenstock has outstanding senior debt of approximately EUR 305 million ('the Senior Debt') which was advanced under a facilities agreement ('the Agreement') governed by English law and containing an exclusive jurisdiction clause in favour of the English courts.

The purpose of the Scheme was to bind the lenders of the Senior Debt ('the Senior Lenders') to a variation of their rights under the Agreement sufficient to enable Rodenstock to implement a restructuring. The dissentient Scheme Creditors consisted of entities which were either managed by Alchemy Special Opportunities LLP ('Alchemy') or which had sold their beneficial interest in the Senior Debt to one of those Scheme Creditors managed by Alchemy. Alchemy voted against the Scheme, but shortly before the hearing it notified its intention no longer to oppose it.



Jurisdiction to sanction solvent schemes

The starting point for the court’s analysis of the jurisdiction to sanction the Scheme was the meaning of 'company' in section 895 of the 2006 Act. This provides (so far as relevant) as follows:

'(1) The provisions of this Part apply where a compromise or arrangement is proposed between a company and ... its creditors, or any class of them.

(2) In this Part … "company" means any company liable to be wound up under the Insolvency Act 1986 …'