One of the recent hot topics in the European restructuring market has been whether the UK Courts would sanction a scheme of arrangement in relation to a foreign company, with no previous connection to the UK whatsoever, where the sole basis for establishing jurisdiction to undertake the scheme would be amending the governing law and jurisdiction clauses of the company’s principal finance documents to English law. This question was answered on 14 April 2014 when the High Court of Justice (the “Court”) approved a scheme of arrangement (the “Scheme”) in relation to nine companies of the German based Apcoa Parking group (“Apcoa”). Apcoa has no connection to, or assets in, the UK at all and its indebtedness was governed by a facilities agreement (the “Facilities Agreement”) which was subject to German law and the exclusive jurisdiction of the courts of Frankfurt/Main. However, by majority lender vote in accordance with the terms of the Facilities Agreement, the governing law and jurisdiction clauses were amended to English law for the sole purpose of establishing jurisdiction of the Court to proceed with a UK scheme.
- Apcoa had no other basis on which to establish jurisdiction to conduct the Scheme;
- The Court accepted jurisdiction on the basis of the amended governing law and jurisdiction clauses and sanctioned the Scheme and thus opened a new avenue to establish jurisdiction;
- The Scheme enabled Apcoa to change material terms of the Facilities Agreement which would otherwise have been subject to unanimous consent and thus overcame minority lender opposition;
- Apcoa successfully executed the Scheme with respect to its group which included German, Austrian, Belgian, Norwegian and Danish companies and thus reaffirmed and extended widespread geographical availability of a UK scheme of arrangement; and...
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