In the matter of the Great Annual Savings Company Ltd

In the matter of the Great Annual Savings Company Ltd

The Company failed to discharge the evidential burden of showing that HMRC would not be any worse off under the plan, due to insufficiently robust valuation evidence regarding the debtor book and the lack of reliable assessment of potential third-party recoveries. Even if Condition A were satisfied, the court would exercise its discretion to refuse sanction because the plan operated unfairly by disproportionately benefiting secured and connected party creditors and shareholders at the expense of HMRC, a major in-the-money creditor, without sufficient justification for the reordering of priorities.

Parties
Applicant Company: The Great Annual Savings Company Ltd; Respondent / Objector: His Majesty’s Revenue and Customs (HMRC); Objector: TotalEnergies Gas & Power Limited (TGP); Objector: Orsted Sales (UK) Limited; Objector: Corona Energy Retail 4 Limited; Objector: Corona Energy Retail 2 Limited
Jurisdiction
England and Wales
Judgment Date
16 May 2023
Procedural Posture
Restructuring Plan Sanction Application / Judgment on Application for 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, Creditors' Rights, Preferential Creditors, Court Discretion in Sanctioning Plans
Insolvency Company Law Restructuring Plan Cross Class Cram Down Creditors' Rights Preferential Creditors Court Discretion in Sanctioning Plans

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Parties

The Great Annual Savings Company Ltd

Applicant Company

His Majesty’s Revenue and Customs (HMRC)

Respondent / Objector

TotalEnergies Gas & Power Limited (TGP)

Objector

Orsted Sales (UK) Limited

Objector

Corona Energy Retail 4 Limited

Objector

Corona Energy Retail 2 Limited

Objector

Procedural Posture

Restructuring Plan Sanction Application / Judgment on Application for Sanction of Restructuring Plan Under Part 26 a Companies Act 2006

Legal Issues

  1. 1 Whether the court has power to sanction the restructuring plan under s.901F and s.901G Companies Act 2006
  2. 2 Whether dissenting creditors (notably HMRC) would be any worse off under the plan than in the relevant alternative (Condition A)
  3. 3 Whether the court should exercise its discretion to sanction the plan given the treatment of creditor classes and fairness

Ratio Decidendi

The Company failed to discharge the evidential burden of showing that HMRC would not be any worse off under the plan, due to insufficiently robust valuation evidence regarding the debtor book and the lack of reliable assessment of potential third-party recoveries. Even if Condition A were satisfied, the court would exercise its discretion to refuse sanction because the plan operated unfairly by disproportionately benefiting secured and connected party creditors and shareholders at the expense of HMRC, a major in-the-money creditor, without sufficient justification for the reordering of priorities.

Court Disposition

Application for sanction of the restructuring plan refused.

Orders

  • The court declines to sanction the restructuring plan under Part 26A Companies Act 2006.