New Judgment – Re Deutsche Glasfaser Group GmbH [2026] EWHC 1563 (Ch) (sanction hearing)

The High Court (Mr Justice Adam Johnson) has handed down judgment giving reasons for sanctioning a scheme of arrangement proposed between the scheme company, Deutsche Glasfaser Group GmbH, and its scheme creditors.  The Court sanctioned the scheme at a hearing on 19 June 2026, with reasons to follow, as now contained in the judgment.

The scheme company, and the group of which it is a part, is a leading provider of fibre optics in Germany.  The scheme forms part of a wider proposed recapitalisation of the scheme company and the group of which it is a part.  The recapitalisation was proposed in order to manage the group’s existing debt of €7 billion and, in particular, the imminent liquidity requirement at the end of June 2026.  The recapitalisation proposed three key elements: bifurcation and reinstatement of the existing debt at two different levels of seniority, the injection of €400 million in new money on a super senior basis, and an equity contribution of €845 million from affiliates of the existing shareholders of the group (with the first and second of the three elements of the recapitalisation taking place by the scheme).

Following the convening hearing at which the Court (Mr Justice Hildyard) convened a single meeting of scheme creditors, the scheme creditors voted overwhelmingly in favour of the scheme, and so the scheme company invited the Court to sanction the Scheme.  In doing so, the Court considered the familiar principles summarised in Re Noble Group Ltd [2019] BCC 349.  In doing so, the Court reached the following important conclusions of relevance to practitioners:

• Whilst there had been amendments to the scheme document and the scheme transaction documents following their formal distribution to scheme creditors under the convening order, this was permissible where the amendments were not material and related to points of mechanics and drafting only. This reflects the position set out in the new Practice Statement Companies: Schemes of Arrangement and Restructuring Plans under Parts 26 and 26A of the Companies Act 2006.

• In order to give scheme creditors more time to consider the documents which had been circulated, it was “entirety proper” for the chair of the scheme meeting (after formally opening the meeting as required by the convening order) to adjourn the meeting and voting to a later date. Whilst the power to adjourn the scheme meeting is commonly granted to the chair in a convening order, this judgment gives a rare reported decision with an example of where the power has been properly used.

• Notwithstanding that the Courts have previously confirmed the power to sanction schemes of arrangement in a form that is modified as compared with the scheme voted on by scheme creditors, the Court confirmed that an amendment to a mobile definition that did not itself require an amendment to any scheme document is unobjectionable. In this case, a key scheme document contained a defined term that referenced a definition in the lock up agreement that had been entered into, where the lock up agreement was an already executed document (and so not a scheme document) that contained provision for amending that definition.  Following an amendment to the definition in the lock up agreement, the scheme company accepted that this changed the effect of the scheme document but it was submitted that this did not amount to an amendment to the scheme document as voted on because scheme creditors (when voting) always knew that the definition could have been amended in this way.  The Court accepted this submission, holding that “this has not involved any amendment to the Scheme as such”, as “it was implicit in the structure to begin with that it might occur, given the ambulatory nature of the definition.”  As a result, where a mobile definition is amended by amending something that is not a scheme document, the Court is not required to view its task as considering whether to sanction the scheme subject to a modification.

Each of these points highlight the flexible and practical approaches and opportunities that a well-advised company and creditor group can take when pursuing a scheme of arrangement.

Tom Smith KC, Henry Phillips and Angus Groom of South Square appeared for the scheme company, instructed by Freshfields LLP.

Adam Al-Attar KC and Matthew Abraham of South Square appeared for the scheme creditors, instructed by Linklaters LLP.

Read the full judgment here