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

The Sponsor would not provide the hoped-for equity because one of its conditions is not satisfied,.

A “Ratings Downgrade” in the WBS Group would follow, and that would trigger a contractual standstill under documents governing the SWS Scheme Debt. The WBS Group would certainly suffer from a shortage of cash, but the SWS Scheme Creditors could not immediately trigger an insolvency process.

As a result of the imposition of the contractual standstill, SWS OpCo would be obliged to perform a “look forward” test by comparing payments falling due in the next 12 months with revenues expected to be received in the next 12 months. If there is a shortfall, SWS OpCo would allocate cash towards its payment obligations in accordance with the ranking of the obligations in question. The witness evidence explains uncertainties as to how that “look forward” test would apply in practice.

In those circumstances, Mr Ledger’s evidence is that the WBS Group would try to borrow on a super senior basis to fund its immediate needs and, in parallel, it would seek to negotiate a new deal with the Sponsor. There would be an incentive on all sides for such a deal to be done since the alternative would be some sort of insolvency process or possibly a special administration which would have the potential to be value destructive. However, Mr Ledger’s evidence and the Comparator Report between them conclude that any such alternative deal is unlikely to produce a better outcome in terms of equity received from the Sponsor.

The Comparator Report concludes that any standstill, whether followed by a deal with the Sponsor, or a special administration, is likely to destroy value in the WBS Group.