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

I see no jurisdictional roadblock to the SWS Scheme. SWS HoldCo is a company incorporated in England and Wales under the Companies Act 2006. I am satisfied from Mr Ledger’s evidence that it is liable to be wound up in England and Wales under the Insolvency Act 1986. It is a “company” for the purposes of s895(2)(b) of CA 2006.

The holders of the SWS Scheme Debt are contingent creditors of SWS HoldCo, given SWS HoldCo’s obligation under the guarantee of the SWS Scheme Debt. As matters stand, those contingent creditors are entitled to call an event of default and claim under SWS HoldCo’s guarantee if a Ratings Downgrade occurs. SWS HoldCo is entering into an arrangement with those contingent creditors that means that a Ratings Downgrade cannot result in any claim. Both SWS HoldCo and SWS Scheme Creditors could realistically be said to get something out of that arrangement. I consider it to be the kind of compromise or arrangement with which Part 26 is concerned since it involves the requisite element of “give and take”.

That is not all that the SWS Scheme seeks to do, however. As I have explained, it also seeks to effect some changes to the underlying SWS Scheme Debt that is issued by persons other than SWS HoldCo. Today is a convening hearing and not a sanction hearing, but I note that there is some support for the proposition that the SWS Scheme can do that. The judgment of the Court of Appeal in Re Lehman Brothers (No 2) [2009] EWCA Civ 1169, which was recently quoted with approval in the judgment of the Court of Appeal in Re Thames Water Utilities Holdings Ltd [2025] EWCA Civ 475, acknowledges that a scheme under Part 26 of CA 2006 can operate to release claims of scheme creditors against third parties which are “merely ancillary” to claims by scheme creditors against the scheme company. I note that the technique proposed is similar to that applied in Re Swissport Fuelling, where there was an argument that the use of a deed of contribution should not be countenanced on the basis that it was a sham or otherwise improper because it sought to avoid an event of default on the issuers of the debt in question.

It may well be that more analysis of this issue is needed at the sanction hearing. Without expressing any view at all, as a matter of pure impression, it seems slightly odd to characterise the modification of the SWS Scheme Debt as “merely ancillary” to the SWS Scheme when it might be said that altering the terms of the SWS Scheme Debt is the true prize sought. However, there is nothing obviously wrong with the proposition that, as part of a compromise or arrangement, SWS HoldCo can ask the SWS Scheme Creditors to enter into related transactions, such as an instruction to a security trustee to agree to amend the terms of the SWS Scheme Debt. There is nothing obviously lacking in the court’s power to sanction a scheme such as this. I do not regard the Deed of Contribution as presenting a “jurisdictional roadblock”.