Creditor meetings convened for SME restructuring plan

Nasmyth’s application sought that the court convene the various meetings of creditors (at which the creditors would vote on the plan). The court acknowledged that they were not sanctioning the plan as part of the convening application and they were limited to considering: jurisdictional matters, whether the section 901 conditions had been met, the different class compositions for the creditor meetings, issues (other than merits or fairness) which may result in the court not sanctioning the plan and practical issues including the adequacy of notice.

The court held for the purposes of s.901(3), the restructuring plan was a compromise as it involved ‘give and take’. It was irrelevant that some creditors had already questioned the plan’s fairness as that would be considered at any sanctions hearing.

In determining creditor class composition, the court was focused on identifying the creditors with similar rights, opposed to interests. The court accepted that Nasmyth’s unsecured creditors should be in a different class to the companies in Nasmyth’s group (which were due intra-group debts from Nasmyth). This was because the creditors’ rights were different due to a subordination deed which bound the companies in Nasmyth’s group. On the issue of whether the creditors had received adequate notice, the court felt notice was adequate given the urgency (due to Nasmyth’s financial position) and as Nasmyth had also agreed that creditors could raise the notice issue again at any sanctions hearing.

Re Nasmyth Group Ltd [2023] EWHC 696 (Ch)