Hurricane Energy PLC, Re [2021] EWHC 1759 (Ch) (28 June 2021)

Hurricane Energy PLC, Re [2021] EWHC 1759 (Ch) (28 June 2021)

The court refused to sanction the restructuring plan because it was not satisfied that none of the shareholders would be any worse off under the plan than in the relevant alternative. There was a realistic possibility that, if the Company continued trading, shareholders could achieve a better outcome than the heavily diluted and non-meaningful return offered by the plan. The Company failed to discharge the burden of proving otherwise, especially given uncertainties in oil price, production, and alternative strategies. The cross-class cram-down condition A was not met.

Citation
[2021] EWHC 1759 (Ch)
Parties
Applicant/company: Hurricane Energy PLC; Respondent/supporting Creditor: Ad Hoc Committee of Bondholders; Respondent/objecting Shareholder: Crystal Amber Fund Limited; Respondent/objecting Shareholder: Paul Steward; Respondent/objecting Shareholder: Peter Baker; Respondent/objecting Shareholder: Derek French
Jurisdiction
England and Wales
Judgment Date
28 June 2021
Procedural Posture
Insolvency/restructuring Plan Sanction Application / Sanction Hearing Under Part 26 a Companies Act 2006
Outcome
Application to sanction the restructuring plan refused.
Legal Topics
Restructuring Plan, Cross Class Cram Down, Shareholder Rights, Bondholder Rights, Section 901 F Companies Act 2006, Section 901 G Companies Act 2006
Insolvency Law Company Law Restructuring Plan Cross Class Cram Down Shareholder Rights Bondholder Rights Section 901 F Companies Act 2006 Section 901 G Companies Act 2006

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Parties

Hurricane Energy PLC

Applicant/company

Ad Hoc Committee of Bondholders

Respondent/supporting Creditor

Crystal Amber Fund Limited

Respondent/objecting Shareholder

Paul Steward

Respondent/objecting Shareholder

Peter Baker

Respondent/objecting Shareholder

Derek French

Respondent/objecting Shareholder

Procedural Posture

Insolvency/restructuring Plan Sanction Application / Sanction Hearing Under Part 26 a Companies Act 2006

Legal Issues

  1. 1 Whether the court should sanction the restructuring plan under section 901F Companies Act 2006 despite shareholder opposition
  2. 2 Whether the cross-class cram-down conditions under section 901G Companies Act 2006 are satisfied, particularly Condition A (no member of dissenting class worse off than in the relevant alternative)
  3. 3 Whether the plan is fair and there is no 'blot' or defect

Ratio Decidendi

The court refused to sanction the restructuring plan because it was not satisfied that none of the shareholders would be any worse off under the plan than in the relevant alternative. There was a realistic possibility that, if the Company continued trading, shareholders could achieve a better outcome than the heavily diluted and non-meaningful return offered by the plan. The Company failed to discharge the burden of proving otherwise, especially given uncertainties in oil price, production, and alternative strategies. The cross-class cram-down condition A was not met.

Court Disposition

Application to sanction the restructuring plan refused.

Orders

  • The court declines to sanction the restructuring plan under section 901F Companies Act 2006.
  • No order as to costs specified in the judgment.