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

I am asked to make other directions, for example, in relation to CPR 5.4D(2), that persons give notice if anyone applies to obtain documents from the court file and to give permission for the expert evidence to be relied upon. I am content to make directions in those terms in the orders convening meetings for both Schemes.

I have also made directions designed to ensure that any objection to the MidCo Scheme is properly explained and evidenced in sufficient time for it to be considered at any sanction hearing. Initially the MidCo Scheme Company was asking me to order that such directions should be agreed to the extent possible or, to the extent they could not be agreed, determined following an urgent expedited application to myself. I regarded that as impracticable. It is appropriate that there be some case management directions in place now given that the court is on notice that CBA may choose to object to sanction of the MidCo Scheme if it is approved.

CBA has not attended today’s hearing by counsel, although a representative of CBA’s solicitors was in attendance at the hearing. Mr Willson told me of difficulties that CBA had in committing to a firm timetable for explaining or evidencing any objections given that they are attempting to sell their interest in the MidCo Facility Agreement with the auction process being run out of Australia with a consequent time difference. I did not, however, consider that to be a good reason to refrain altogether from making case management directions. CBA may, or may not, succeed in auctioning their interest in the MidCo Facility Agreement. I do not consider that case management directions designed to enable any objection to be considered at the sanction hearing should be deferred simply because CBA might find a potential purchaser. If CBA, or a prospective purchaser seek a variation to my directions, they have liberty to apply.

During discussions on the form of the convening order for the SWS Scheme, I discussed the role of Assured Guaranty with Mr Perkins. Both Assured Guaranty and holders of Class A4 debt are contingent creditors of SWS HoldCo in relation to the Class A4 debt that is guaranteed by Assured Guaranty (the “Class A4 wrapped debt”). Assured Guaranty is a contingent creditor because it may be called upon to pay holders of Class A4 wrapped debt. If Assured Guaranty has to make such payments it can invoke its subrogation rights to make a claim against the SWS Borrowers. That claim could in turn lead to a claim by Assured Guaranty under SWS HoldCo’s guarantee. Holders of Class A4 debt are contingent creditors because they have a straightforward right to make a claim under SWS HoldCo’s guarantee.

It would clearly not be right for both Assured Guaranty and holders of Class A4 wrapped debt to vote on what is in substance the same liability at the meeting of creditors. Mr Perkins has persuaded me that the right course is for Assured Guaranty to vote as to the principal amount of the relevant claim with holders of the Class A4 wrapped debt voting as to a nominal £1.

The reason for that is that Assured Guaranty has the status of “Class A DIG Representative” in relation to the Class A4 debt that it guarantees. As such, if there is a contractual standstill following an event of default, Assured Guaranty has the right (to the exclusion of holders of the Class A4 wrapped debt) to express views to the Debt Instructing Group (“DIG”) as to whether that standstill should continue or be brought to an end so triggering insolvency proceedings. In circumstances where Assured Guaranty has the sole voice on that issue, and the SWS Scheme will determine, given my conclusions on the comparator transaction, whether a standstill arrangement comes into being, in my judgment it is appropriate that Assured Guaranty exercise the voting rights associated with the relevant Class A4 wrapped debt. Moreover, ultimately it is Assured Guaranty who would, by virtue of its guarantee, have to bear the economic consequences connected with the relevant Class A4 wrapped debt should the WBS Group enter into an insolvency process.

SWS HoldCo fairly drew attention to this issue in the SWS Practice Statement letter. No objection has been raised to SWS HoldCo’s proposal. For the reasons above, I am content for the meeting to consider the SWS Scheme to proceed on the basis that SWS HoldCo proposes.

More generally, I went through both convening orders with counsel and was satisfied that they set out practicable and workable arrangements for meetings of creditors to consider both Schemes.

I have accordingly decided to convene meetings of creditors to consider, and if thought fit approve, the Schemes.