Specialty Steel restructuring plan moves to next stage

This was the adjourned convening hearing for the Specialty Steel restructuring plan. The original hearing was adjourned in light of creditors’ objections to its terms, which were amended on negotiation before the matter came back before the court.

The objecting creditors were not entirely happy with the amended position, but agreed that the plan should be put to creditors. However, what concerned the judge was that, due to the previous, and on-going, negotiations, the plan that was put to creditors was unlikely to be the plan that had been put to the court.

The judge’s view was that, “in usual circumstances” the plan put before the court should be in substantially the same form as that which is put before the creditors and that the convening order shouldn't simply be a platform from which a plan can be negotiated and substantially changed.

The judge found that such a practice should only be allowed in exceptional circumstances, but was prepared to order that a restructuring plan, reflecting the negotiated position between the parties, should be put to creditors as it was accepted that, not to do so, may lead to a perception that the plan was unlikely to succeed and critical creditors may decide not to trade with the company, leading to its liquidation.

The judge ran through the background to the plan and what was required to enable the court to order that creditor meetings be convened and concluded that a convening order should be made.

In the matter of Speciality Steel UK Limited [2024] EWHC 3355 (Ch)

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