Re Primacom Holding GmbH: To Scheme or Not to Scheme – That Was The Question...
Providing further evidence that schemes of arrangement ("schemes") are an increasingly useful tool in the restructuring of overseas companies, on 20 January 2012, the High Court sanctioned a scheme proposed by PrimaCom Holding GmbH ("PrimaCom"), a German incorporated company, with its centre of main interests (or "COMI") in Germany and whose affected creditors were domiciled outside the UK.
The decision is in line with the recent judgment of Briggs J in Re Rodenstock  EWHC 1104 (Ch) which confirmed that the English courts have jurisdiction to sanction schemes for foreign-incorporated companies. Further, this case also addressed one of the issues left unresolved in Rodenstock, namely whether the English courts have jurisdiction to sanction a scheme where a majority of the scheme creditors are domiciled outside the UK. Had the answer to this crucial question been negative, the viability of schemes for overseas companies going forward would have been severely limited.
This client bulletin analyses the reasoning behind the decision and its potential impact.