CR-2025-005763 and CR-2025-005674 - [2025] EWHC 2318 (Ch)

Fecha: 02-Sep-2025

Class analysis – the SWS Scheme

Class analysis – the SWS Scheme

49.

The proposal is that all holders of the SWS Scheme Debt lose the ability to call an event of default because of the occurrence of a Ratings Downgrade.

50.

SWS HoldCo says that it could, in theory, require everyone to vote as a single class, and that the different maturities and commercial terms of the various individual items of SWS Scheme Debt are not relevant where everyone is facing the same effective change to their bonds. Although not suggested to be binding on me because of the different facts of the cases, examples are given where the court has accepted an argument similar to this – for example, Re Castle Trust Direct plc [2020] EWHC 969.

51.

I do not need to make a decision on it, but I am not entirely sure about the single class analysis. It seems to me that it is relevant that, if the SWS Scheme is not passed, then there would be a Ratings Downgrade. The Group would continue carrying on as a going concern for a period at least, but, during the period in which it is continuing, the “look forward test” would mean that holders’ rights against SWS HoldCo could depend on the seniority of their debt. Therefore, it seems to me that, in the comparator, a creditor holding more senior debt might be less affected than a holder of more junior debt because of its rights against the company.

52.

I therefore think it is correct, as SWS HoldCo has done, to seek to divide the debt into classes that reflect seniority. I agree with SWS HoldCo that, once that has been done, the different commercial terms do not make a difference. For example, the fact that one SWS Scheme Creditor holds debt with a different interest rate and maturity from another does not fracture the class. All creditors are being offered the same basic choice that is not affected by, and does not affect, the interest and maturities of the various SWS Scheme Debt. It certainly would not be right, in my judgment, to have 32 classes of debt reflecting the 32 debt instruments that are affected.

53.

I will sense check that conclusion by reference to other considerations:

I note that some of the Class A4 debt is guaranteed by Assured Guaranty. Assured Guaranty is liable to pay principal and interest on the Class A4 debt on the contractual date for payment if the issuer of the Class A4 debt does not do so. However, acceleration of the Class A4 debt does not accelerate Assured Guaranty’s liability. Therefore, holders of affected Class A4 debt simply have additional rights against Assured Guaranty. That is not enough to fracture the class (see, for example, paragraph (3) of the extract from Zacaroli J’s judgment in Re Gategroup Guarantee that I quote above). The position might have been otherwise if acceleration of the Class A4 debt gave rise to accelerated claims against Assured Guaranty since holders of the Class A4 debt might have some incentive because of their “rights in” to tolerate a winding up of the relevant member of the WBS Group so as to obtain money from Assured Guaranty sooner.

I have considered the consent fee. In my judgment, that does not fracture the class either. The consent fee is available to anyone who chooses to sign up to the lock-up agreement. All SWS Scheme Creditors therefore have the same “right in”, namely the right to sign up to the lock-up agreement if they choose. Moreover, pragmatically, the consent fee is small. I do not consider that it would make any material difference between holders choosing to vote in favour of the SWS Scheme or against.

Class A4 is put in a different class because of the right to make-whole payments. I am prepared to accept that on grounds of pragmatism. It seems to me that a case could have been made for putting Class A4 and Class A3 together, but it seems to me appropriate and prudent for Class A4 to be a separate class.