High Court Approves SCUR-Alpha 1092 GmbH Restructuring Scheme Amid Sanctions Concerns

What did the High Court decide?

In Re SCUR-Alpha 1092 GmbH [2026] EWHC 2735 (BP), handed down on 23 October 2026, Mr Justice Hildyard approved the scheme of arrangement under section 899 of the Companies Act 2006.

The company sought sanction for a restructuring arrangement approved at a creditors’ meeting on 22 September 2026. The judge considered amendments made after the original convening order, the adequacy of information supplied to creditors, the fairness and rationality of the scheme, and whether the proposed holding-period trust raised an issue under the rule restricting English courts from enforcing foreign penal, revenue or other public laws.

The court concluded that the statutory majorities had been met and that there was no sufficient reason to withhold sanction. It also found no legal defect that would make the scheme inoperable.

How did creditors vote?

Thirteen of the company’s 14 scheme creditors attended and voted, representing approximately 97.4% of the liabilities by value. Eleven creditors voted in favour and two voted against.

The judge was satisfied that the majority was a reliable expression of the creditors’ informed commercial judgment. Although several supporting creditors had participated in the restructuring negotiations or were entitled to backstop fees, the court found that these arrangements did not make the vote unrepresentative or show that the majority’s interests were adverse to the class.

The court also concluded that the scheme was rational. For a non-participating creditor, the mid-case recovery under the scheme was estimated at 13.9%, compared with 10.7% in the insolvency scenario. The judgment noted that the scheme would provide deleveraging of approximately €74 million and new money for the group.

What does the restructuring involve?

The scheme concerns liabilities under a senior facilities agreement governed by English law. The existing term facility amounted to €169 million and the revolving credit facility to €20 million. The restructuring is intended to reduce total debt, excluding local lines, from €241 million to €166.6 million.

Under the proposed arrangements, ownership of the group is to pass through new holding companies to an autonomous Dutch foundation. A new super senior facility of €119.6 million is to be established, while remaining scheme liabilities are exchanged into a restated term facility and a new holdco payment-in-kind facility, with the balance waived.

The company initially contemplated a German StaRUG process to address potential tax liabilities. It later decided not to pursue that process and instead introduced a contingent subordination structure, known as the QR Structure. If specified tax liabilities crystallise above the relevant threshold, parts of existing debt can be converted into deeply subordinated QR loans to keep leverage within the limit required for the restructuring opinion.

The court accepted that the QR Structure applied to scheme creditors alike and was intended to preserve the availability of the restructuring, rather than to confer a different set of rights on selected creditors.

How did the court address sanctions?

A central issue concerned MeSoFa Vermögensverwaltungs AG in Abwicklung, a creditor whose restructuring entitlements were required under a US Office of Foreign Assets Control (OFAC) licence to be held on trust until it ceased to be subject to US sanctions or OFAC authorised a transfer.

The court considered whether approving the trust would amount to indirect enforcement of US sanctions, contrary to the English law rule against enforcing certain foreign public laws. Mr Justice Hildyard concluded that the trust was better characterised as a familiar mechanism for holding amounts due to a creditor that cannot immediately receive them, while allowing the company to perform its obligations consistently with the licence under which it was acting.

The judge therefore held that the trust was not properly regarded as indirect enforcement of US sanctions and was not objectionable or unfair. MeSoFa’s entitlements were calculated in the same way as those of other creditors; the trust affected how the entitlements were held, rather than the underlying rights.

The trust may continue indefinitely while the relevant restriction remains and no authorisation is obtained. After three years, an alternative-transferee mechanism may be used only with separate OFAC authorisation, and the relevant property or consideration must remain subject to the trust arrangements. The court found that this was not a forfeiture of the creditor’s entitlement.

What guidance does the judgment provide?

The judgment contains a procedural reminder for companies conducting schemes of arrangement. Material changes were made to the scheme documents after the convening order, and a lengthy supplemental explanatory statement was circulated before the creditors’ meeting. The judge accepted that the creditors had ultimately been sufficiently informed and that the changes did not alter the class composition or undermine the vote.

Where material changes are made to scheme documents after a convening order, the court should ordinarily be informed before the class meeting takes place.

Mr Justice Hildyard said that the better course would usually be to refer material changes back to the court, preferably to the judge who made the convening order. The court should be able to consider whether the changes require revised directions or affect the composition of the class.

In this case, the judge decided that the particular departure did not justify upsetting the result, given the weight of creditor support and the information provided during the process. He also accepted that the remaining implementation conditions were not a sufficient reason to refuse sanction, as there was no reason to suppose they would not be satisfied.

The decision offers useful guidance for restructuring professionals on creditor consultation, voting fairness, sanctions-related payment arrangements and the management of changes made after a scheme has been convened.