In the matter of Fitness First Clubs Limited

In the matter of Fitness First Clubs Limited

The statutory conditions for cross-class cram down under section 901G of the Companies Act 2006 are satisfied: the relevant alternative is administration with an accelerated M&A process, in which only the secured creditor and HMRC would recover materially; all other creditors are out of the money. The Plan provides a better return for all creditors than the relevant alternative. The objections of the dissenting landlords carry little weight as they are out of the money. The compromise of guarantees and exclusion of Maddox are justified. The Plan is fair and should be sanctioned.

Parties
Applicant / Plan Company: Fitness First Clubs Limited; Objector / Creditor (class B1 Landlord): Lazari Properties 1 Limited; Objector / Creditor (class B2 Landlord): Daejan Investments Limited; Objector / Creditor (class B2 Landlord): The Crown Estate; Objector / Creditor (class B2 Landlord): Vanquish Properties GP Nominee 3 Limited; Objector / Creditor (class B2 Landlord): Vanquish Properties GP Nominee 4 Limited; Creditor (preferential): HMRC; Secured Creditor / Shareholder: Ms. Jayne Alison Best
Jurisdiction
England and Wales
Judgment Date
11 September 2024
Procedural Posture
Restructuring Plan Sanction Application / Sanction Hearing and Judgment
Outcome
Plan sanctioned; no order as to costs.
Legal Topics
Restructuring Plan, Cross Class Cram Down, Creditors' Rights, Administration, Sanction of Arrangement, Guarantee Compromise
Insolvency Law Company Law Restructuring Plan Cross Class Cram Down Creditors' Rights Administration Sanction of Arrangement Guarantee Compromise

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Parties

Fitness First Clubs Limited

Applicant / Plan Company

Lazari Properties 1 Limited

Objector / Creditor (class B1 Landlord)

Daejan Investments Limited

Objector / Creditor (class B2 Landlord)

The Crown Estate

Objector / Creditor (class B2 Landlord)

Vanquish Properties GP Nominee 3 Limited

Objector / Creditor (class B2 Landlord)

Vanquish Properties GP Nominee 4 Limited

Objector / Creditor (class B2 Landlord)

HMRC

Creditor (preferential)

Ms. Jayne Alison Best

Secured Creditor / Shareholder

Procedural Posture

Restructuring Plan Sanction Application / Sanction Hearing and Judgment

Legal Issues

  1. 1 Whether the statutory conditions for cross-class cram down under section 901G of the Companies Act 2006 are satisfied
  2. 2 Whether the relevant alternative is administration with an accelerated M&A process
  3. 3 Whether dissenting landlord creditors are 'out of the money' and their views should carry weight

Ratio Decidendi

The statutory conditions for cross-class cram down under section 901G of the Companies Act 2006 are satisfied: the relevant alternative is administration with an accelerated M&A process, in which only the secured creditor and HMRC would recover materially; all other creditors are out of the money. The Plan provides a better return for all creditors than the relevant alternative. The objections of the dissenting landlords carry little weight as they are out of the money. The compromise of guarantees and exclusion of Maddox are justified. The Plan is fair and should be sanctioned.

Court Disposition

Plan sanctioned; no order as to costs.

Orders

  • The Restructuring Plan is sanctioned in the terms of the draft order.
  • No order as to costs; each party to bear its own costs.