On 28 June 2021, Zacaroli J declined to sanction a restructuring plan (the “Plan”) in respect of Hurricane Energy PLC (the “Company”) under section 901F of the Companies Act 2006 (“CA 2006”). The Company is part of a group whose business is extracting oil stored within fractures in solid rock beneath the sea. Although the Company anticipated being able to trade profitably in the near-term, it predicted that it would be unable to repay its bonds in full at maturity and proposed the Plan to, amongst other things, extend maturity, reduce principal and issue equity to the bondholders, who would take ownership of 95% of the shares.
The unusual sanction decision followed an equally unusual convening hearing, during which Zacaroli J ordered that a meeting of shareholders of the Company be convened to vote on the Plan, in addition to the bondholder class. The judge disagreed with the Company’s justification for excluding shareholders, that they were not “affected” by the Plan. In the judge’s view, the shareholders were “affected” by the Plan as a result of their envisaged dilution from 100% down to 5% of the Company’s equity and the disapplication of their statutory pre-emption rights, were the Plan to be sanctioned.
