New Judgment: In the Matter of SWS Holdings Limited and Greensands Financing Plc

The first scheme was proposed by SWS Holdings Limited (the “OpCo Scheme Company”), which forms part of the ‘whole-business securitisation’ corporate sub-group of Southern Water (the “OpCo Scheme”). The OpCo Scheme’s limited purpose was to remove a “hair-trigger” event of default from the finance documents, which was thought to create excessive uncertainty and expose the WBS group and its creditors to unnecessary risk.

The second scheme was proposed by Greensands Financing PLC (the “MidCo Scheme Company”), which forms part of the MidCo corporate sub-group (the “MidCo Scheme”) and acts as a holding company raising finance for the benefit of the WBS group. The MidCo Scheme’s purpose was to amend and extend c. £400 million of the MidCo group’s financial indebtedness.

The schemes enjoyed very strong support. The OpCo Scheme commanded near unanimous support from the four classes of its scheme creditors, whilst the MidCo Scheme was approved unanimously by its scheme creditors voting in a single class. One MidCo Scheme creditor which had reserved its position to oppose that scheme at the convening hearing ultimately voted in favour.

Hearing the sanction applications in respect of the OpCo Scheme and the MidCo Scheme concurrently, Mr Justice Richards sanctioned both schemes. His judgment contains interesting discussion as to:

• the use of deeds of contribution in this context;
• the approach the court takes when the commercial effectiveness of a scheme is subject to conditions; and
• the effect of a unanimous vote on both the court’s jurisdiction and the exercise of its discretion to sanction.

The OpCo Scheme Company was represented by Daniel Bayfield KC and Ryan Perkins instructed by Latham & Watkins LLP.

The MidCo Scheme Company was represented by William Willson and Edoardo Lupi instructed by Jones Day.

A group of the creditors supporting the MidCo Scheme were represented by Joe Curl KC at the convening hearing instructed by Greenberg Traurig LLP.

A copy of the judgment can be located here.