In the matter of Nasmyth Group Limited

In the matter of Nasmyth Group Limited

The plan was not sanctioned because it was unfair to HMRC, the principal preferential creditor, whose debts would be crammed down for a nominal sum without agreement on time to pay arrangements, and because the plan's effectiveness depended on a 'roadblock'—the failure to secure HMRC's agreement to new TTP arrangements for the Group. The directors' decision to proceed to administration if the plan was not sanctioned was accepted, but the court found the plan's treatment of HMRC and the lack of critical creditor status for HMRC to be decisive. The plan's fairness to other unsecured creditors was considered but not determinative.

Parties
Applicant Company: Nasmyth Group Ltd; Preferential Creditor / Respondent: His Majesty’s Revenue and Customs (HMRC); Unsecured Creditor / Respondent: Mr Peter John Smith; Unsecured Creditor / Respondent: Mr Christopher John Henson
Jurisdiction
England and Wales
Judgment Date
11 September 2024
Procedural Posture
Insolvency / Restructuring Plan Sanction Application / Judgment on Sanction of Restructuring Plan Under Part 26 A, Companies Act 2006
Outcome
Application for sanction of the restructuring plan refused.
Legal Topics
Restructuring Plan, Cross Class Cram Down, Preferential Creditors, Critical Supply Creditors, Sanction Discretion, No Worse Off Test, Class Composition
Insolvency Law Company Law Restructuring Plan Cross Class Cram Down Preferential Creditors Critical Supply Creditors Sanction Discretion No Worse Off Test +1 more

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Parties

Nasmyth Group Ltd

Applicant Company

His Majesty’s Revenue and Customs (HMRC)

Preferential Creditor / Respondent

Mr Peter John Smith

Unsecured Creditor / Respondent

Mr Christopher John Henson

Unsecured Creditor / Respondent

Procedural Posture

Insolvency / Restructuring Plan Sanction Application / Judgment on Sanction of Restructuring Plan Under Part 26 A, Companies Act 2006

Legal Issues

  1. 1 Whether the restructuring plan should be sanctioned under Part 26A of the Companies Act 2006
  2. 2 Whether the statutory conditions for cross-class cram down are satisfied
  3. 3 Whether the plan is fair and free from legal defects ('blots' or 'roadblocks')

Ratio Decidendi

The plan was not sanctioned because it was unfair to HMRC, the principal preferential creditor, whose debts would be crammed down for a nominal sum without agreement on time to pay arrangements, and because the plan's effectiveness depended on a 'roadblock'—the failure to secure HMRC's agreement to new TTP arrangements for the Group. The directors' decision to proceed to administration if the plan was not sanctioned was accepted, but the court found the plan's treatment of HMRC and the lack of critical creditor status for HMRC to be decisive. The plan's fairness to other unsecured creditors was considered but not determinative.

Court Disposition

Application for sanction of the restructuring plan refused.

Orders

  • The application to sanction the restructuring plan under Part 26A of the Companies Act 2006 is dismissed.