“EG believes that it can offer you an accelerated transaction at a compelling price with deal certainty. Its Proposal is fully-financed and offers an exceptionally high degree of certainty. Upon acceptance of the terms outlined in the Proposal, EG is prepared to immediately work with you to negotiate the transaction documents and would intend to sign definitive documentation within 10 business days. Company Voluntary Arrangement (CVA) Creditors’ Decision Procedure -30 November 2020 We are of course acutely aware that the CVA creditors’ decision procedure (utilising electronic voting) of Nero Holdings Limited (“NHL”), is due to be finalised tomorrow at 23.59,30 November 2020 . As you are fully aware, the directors and nominees of the CVA are subject to a strict legal duty of full and frank disclosure to all creditors, prior to creditors’ submitting and finalising their vote. Our compelling, attractive and deliverable offer (as set out in more detail below), is in the best interests of all creditors of NHL, in particular landlords. Aspart of our offer, our client is willing to pay all landlord rent arrears in full, whichoffers a materially better outcome to all landlords, based upon what we understand to be the current treatment and material deduction of the rent arrears in the CVA. We are of the view that the most appropriate course of action is forthe directors and nominees of the CVA to disclose to the CVA creditors that theboard has received this offer which it needs to consider further and to adjourn theCVA decision procedure for at least 14 days to fully consider our client’s offer, asset out herein. We and our client, are happy to discuss this further with you and your advisers. Company Voluntary Arrangement (CVA) Creditors’ Decision Procedure -30 November 2020 The Proposal itself was explained as follows: 19. EG is submitting a Proposal ascribing an enterprise value of GBP 350-400 MM to the Company. This Proposal is presented on a cash-free and debt-free basis, assuming a normalized level of working capital and that all of your transaction fees and related expenses, if any, will be paid from such amount, and is a cash offer payable upon closing. All third party debt financing would be settled in cash at closing. This Proposal is also conditional upon the approval ofthe CVA. However, our client is willing to offer materially enhanced terms to theCVA, by offering to pay all landlord rent arrears in full (which we understand areto be materially compromised under the current CVA terms). We envisage that allother terms of the CVA will remain as is and so a short adjournment of the decision procedure is only required for the board to : (i) improve landlords overall outcome under the CVA proposal; (ii) modify the CVA terms in relation to the arrears of rent, so that rent arrears are no longer compromised; and (iii) deliver a clear stable platform for the business post the CVA, which is in the interests of creditors as a whole.”
“3.1 In consideration for the payment in accordance with Clause 2 (Payment), you undertake to EG and confirm that from the Effective Date, you will: (1) Reject the CNG Offer This was an offer that had been made by the Company to settle the proceedings brought by Mr Young. and any Subsequent Offer This was defined as “any offer subsequent to the CNG Offer from Nero Holdings Limited and / or its Related Parties or any one of them (including for the avoidance of doubt, Gerald William Ford and any other ultimate beneficial owner of Nero Holdings Limited and / or any person or entity acting for, on behalf of, or in concert with such persons), where such offer is conditional upon withdrawing the Challenge” ; (2) Not take any further step or action whatsoever to progress negotiations or discussions with respect to the CNG Offer or any Subsequent Offer; (3) Refrain from taking any step or action that would, or would have the direct effect of withdrawing, terminating, frustrating or otherwise bringing to an end, the Challenge, except with EG’s written consent; (4) Subject to continued indemnity for legal costs and losses on the terms set out in and pursuant to the Deed of Indemnity, use best endeavours to continue to support the Challenge; and (5) Subject to continued indemnity for legal costs and losses on the terms set out in and pursuant to the Deed of Indemnity, take all steps and actions necessary to continue the due and orderly progression of the Challenge”
“4.1 From and subject to the occurrence of the Acquisition Date This was defined in the Supplemental Agreement as the completion date of an acquisition by EG or one of its affiliates (a “Related Party”) of NGL or one of its subsidiaries. , in consideration of the parties agreeing to perform their respective obligations under this letter, you agree that this letter is in full and final settlement of the Landlord Claims, and you release and forever discharge to the fullest extent permitted by law EG and its related Parties from all Landlord Claims, and that such Landlord Claims shall be fully and finally released and extinguished with effect from the Acquisition Date”
“a person entitled, in accordance with the rules to vote at the meeting of the company or in the relevant qualifying decision procedure”
“In their Lordships’ opinion two different kinds of cases must be distinguished when considering the question of a party’s standing to make an application to the court. The first occurs when the court is asked to exercise a power conferred on it by statute. In such a case the court must examine the statute to see whether it identifies the category of person who may make the application. This goes to the jurisdiction of the court for the court has no jurisdiction to exercise a statutory power except on the application of a person qualified by the statute to make it. The second is more general. Where the court is asked toexercise a statutory power or its inherent jurisdiction, it will act only on theapplication of a party with a sufficient interest to make it. This is not a matterof jurisdiction. It is a matter of judicial restraint. Orders made by the court are coercive. Every order of the court affects the freedom of action of the party against whom it is made and sometimes (as in the present case) of other parties as well. It is, therefore, incumbent on the court to consider not only whether it has jurisdiction to make the order but whether the applicant is a proper person to invoke the jurisdiction. Where the court is asked to exercise a statutory power, therefore, the applicant must show that he is a person qualified to make the application. But this does not conclude the question. He must also show that he is a proper person tomake the application. This does not mean, as the plaintiff submits, that he "has an interest in making the application or may be affected by its outcome." It means that he has a legitimate interest in the relief sought. Thus even though the statute does not limit the category of person who may make the application, the court will not remove a liquidator of an insolvent company on the application of a contributory who is not also a creditor: see In re Corbenstoke Ltd (No 2) [1990] B.C.L.C. 60. This case was criticised by the plaintiff: their Lordships consider that it was correctly decided. The standing of an applicant cannot therefore be considered separately and without regard to the nature of the relief for which the application is made. Section 106(1) does not limit the category of persons who may make the application. The plaintiff, therefore, does not lack a statutory qualification to invoke the section. But the question remains whether it has a legitimate interestin the relief which it seeks.”
“The plaintiff is not merely a stranger to the liquidation; its interests are adverse to the liquidation and the interests of the creditors. In their Lordships’ opinion, it has no legitimate interest in the identity of the liquidators, and is not a proper person to invoke the statutory jurisdiction of the court to remove the incumbent office-holders.”
“In my view, the situation in this case is in substance the same. It is true that the applicants are creditors, and would have locus standi if acting as such; but this is irrelevant, since they are in fact seeking to advance the interests of possible debtors, which are adverse to those of the creditors. I agree with Mr Moss’s submissions that the operative principle is judicial restraint, that there is no doubt about the court’s jurisdiction, that there is no absolute rule as to when it will be exercised and that the court might well act to restrain reasonably anticipated impropriety, even if revealed by an unmeritorious application on the part of a person without a legitimate interest.”
“137. …But it does not mean that the Applicants have no legitimate interest in pursuing the Application. First, because if matters do pan out as anticipated then the Applicants have the benefit of a “gentlemen’s agreement” with Mr Ashley that in his negotiations they will be treated more favourably than they are under the CVA. Second, the Applicants take a jurisdiction point in relation to which the merits of their conduct and the exact nature of their interest are irrelevant.”
“78 …The very nature of the bankruptcy regime is such that the bankrupt having taken the benefit of being relieved of his debts, absent fraud, cannot have standing to interfere with the day-to-day administration of the estate by the trustee on behalf of the creditors. He must be able to show that he has a substantial interest which has been affected by the conduct complained of and a direct interest in the relief sought. The potential existence of a surplus is one way ofbeing able to demonstrate such a substantial interest but it seems to me that it isnot the only one. 79 In my judgment, therefore, although the principles in the Dodwell and Deloitte cases apply in relation to applications under ss.303(1) and 168(5), thejudge was wrong to apply the Deloitte case narrowly and to concentrate solely onwhether there is a surplus in this case.”
“85 It seems to me that in the light of the pleaded conduct, which for this purpose is assumed to be true, the Brakes in their capacity as bankrupts have a legitimate and substantial interest in the relief sought sufficient to give them standing to make an application under s.303(1). At the very least, their interests were substantially affected by the grant of the Licence, the consequences which flowed from it and Mr Swift’s alleged unlawful acts. This is not a case such as Dodwell, in which the bankrupts seek merely to interfere in every day conduct of the bankrupt estate or in transactions effected by the trustee merely as a matter of commercial judgment. It seems to me that assuming the allegations to be true, it is not only perfectly arguable that at least some of the acts satisfy the substantive perversity test expounded in the Edennote and Mahomed cases but also that the Brakes have a direct interest in the relief sought. It also follows that when determining the preliminary question of standing, the judge was wrong to decide definitively that the acts complained of were not acts by Mr Swift in the bankruptcy.”
“41. It was, therefore, frustrating that the Offer, which if pursued would have been hugely beneficial to small landlords like me, was given such short shrift. [The Company] had been seeking [the Company’s] landlords’ cooperation in granting waivers of rent for several months and, yet, when presented with an offer which was guaranteeing to pay landlords’ full contractual rent, the offer was rejected out of hand. 42. It was also frustrating that the details of the Offer were not brought to the attention of the [Company’s] landlords. [The Company] had sought to appear open with landlords regarding its financial position, presumably in order to persuade landlords to agree to substantial waivers of rent. However, it chose to provide incomplete and selective information regarding the Offer, who had made it, and what had been proposed. I felt that [the Company] was morally bound to consider the Offer and go back to us to inform us of the late bid and what that potentially meant for us. They should have at the very least sought to postpone the vote to consider the Offer, and inform the landlords of the details of the Offer. We could have then voted a few weeks later when we had a chance to see what was on the table.”
“45. Given my unhappiness with the way the CVA had been handled throughout the process and in particular following the receipt of the Offer, I decided to register my interest in joining the potential challenge to the CVA. 46. Subsequently, on29 December 2020 , I issued the CVA Challenge, along with 6 other Landlords. In addition to my issues with [the Company’s] conduct of its business and its approach to negotiations regarding the waiving of rent, the CVA and the [Company’s] handling of the Offer did not sit well with me, and I wanted to hold [the Company] to account.”
“51. …By that point, in February 2021, I was concerned as it had been almost a year since I had received rent payments. I explained that, with outstanding rent payments of almost a year and legal costs that I had incurred in relation to NHL’s failure to pay rent, my total losses amounted to between£65 – 70,000. He then offered me£100,000 , which was obviously attractive to me as I had already challenged the CVA for the reasons I have explained. I understand that EG was willing to pay me this additional amount in order that I should not settle with [the Company]. I was prepared to agree to this because it provided me with immediate monies.”
“61. I could not have accepted the [25 March] Offer without EG’s consent because of the Supplemental Agreement I have made. However, in any case I had decided that I was going to challenge the CVA, that I would continue with the challenge, and that I would see the challenge through for the reasons I summarise in the next section of this statement.”
“77. In the circumstances, it is my position that I have a legitimate interest in the relief being sought. It is also my position that my interest is aligned with that of other CVA Creditors. My purpose in challenging the CVA, if achieved, will lead to a better outcome for me and for all other Compromised Landlords. My interest is not opposed to theirs and I strongly disagree with Mr Stevenson’s assertions that my purpose is improper or hostile to the interests of CVA Creditors. That is not the case.”
“81. It is correct that I need consent from EG in order to settle the proceedings. However, EG does not have any control as to how I conduct the CVA Challenge. My solicitors, [CMS] act for me alone and, as the sole remaining applicant, only I give instructions and take decisions in relation to the Challenge Application.”
“The circumstances in which the court will regard conduct as amounting to an abuse of process are not narrowly defined, nor should they be. Although certain types of abuse are well recognised, it is necessary for the courts to have the power to control their own proceedings and to prevent abuse, whatever guise it may take.”
“In the present case, if the real object of [the defendant] in commencing proceedings was to force the directors of the plaintiff company to negotiate that was not an end which the court would enforce. If to achieve the collateral object [the defendant] launched the winding-up proceedings even if it be assumed that the winding up order might have been available in the circumstances, that order was nevertheless not something which fundamentally he sought. If his strategy was to bring pressure to bear or simply or predominantly to force the directors to negotiate with him over his demands, he would be abusing the process of the court. Accepting that a bona fide plaintiff may be forced to choose among a limited number of available remedies, it may be said that there will be no abuse involved when a plaintiff genuinely desires the objective which the law will grant if he sues and succeeds and if he genuinely wishes to use the proceedings to obtain that objective. But if a test is formulated along any such lines as these, the conduct of [the defendant] will inevitably be found wanting. His own evidence, including his answers in cross-examination, is not the least damaging aspect for him. The impression is also borne out by a consideration of the evidence of Sanderson.”