This recent decision has opened up a new opportunity for creditors who are not satisfied with a proposal to put forward their own restructuring plan.
Good Box Co Labs Limited (the Company), a fintech start-up, developed contactless payment technologies in the charity sector.
It entered administration in June 2022 on the application of NGI Systems Limited (NGI) a principal technology supplier, creditor and shareholder of the Company.
NGI, unhappy with the administrator's proposal to sell the business, proposed a restructuring plan providing rescue funding along with a syndicate of lenders.
The proposed restructuring plan was approved by all classes, save for a class of convertible loan note holders who voted unanimously against it. The administrators raised concerns at the sanction hearing but did not formally oppose the plan.
The Court held that the consent of the company is required for a restructuring plan and directed the administrators to consent on the Company's behalf.
The court exercised its cross-class cram down powers against the dissenting class as all classes would be no worse off under the plan than in the relevant alternative of an administration sale.
This is the first time that the court has sanctioned a creditor-led restructuring plan as an alternative to an administration sale. Whilst third-party proposed plans are likely to continue to be unusual, this case confirms that the court can and will direct a company (or its officeholders) to consent to a restructuring plan where appropriate.