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

The Sponsor has confirmed that it would not put in the equity without the MidCo Scheme becoming effective. Accordingly, the Sponsor would not provide the hoped-for equity to the WBS Group.

Since the MidCo Group is an “outcome taker”, that would have repercussions for it. The MidCo Group would not be in a position, if the equity contribution is not made into the WBS Group, to repay the £269m of MidCo Scheme Debt that falls due for payment at the end of November 2025. That is because the WBS Group would itself be short of cash and would not be able to pay dividends up to the MidCo Group.

Mr Ledger’s evidence is that the MidCo Group would be unlikely to obtain the funds necessary to repay the MidCo Scheme Debt from other sources. The MidCo Group would therefore be in a position where it could not pay the amount due in November 2025 and there would be an event of default in relation to the MidCo Scheme Debt.

A standstill would ensue which holders of the PP Notes could terminate at any time because they hold 88% of the MidCo Group’s debt. The Comparator Report and Valuation Report consider the possibility that the WBS Group could sell assets and distribute profits arising to the MidCo Scheme Company, but concludes that the proceeds of realisation would not be sufficient to discharge the WBS Group’s liabilities so that there would be no such profits.

The overall conclusion is that members of the MidCo Group would, if the MidCo Scheme fails, be obliged to enter an insolvency process with just £10.6m of cash available to repay the MidCo Scheme Debt which has a principal amount of many multiples of that.