Chandlers Building Supplies Limited & Ors, Re

MR JUSTICE HILDYARD:

1. The thirteen Plan Companies identified in the heading to these proceedings seek orders sanctioning 13 inter-conditional restructuring Plans (which I shall call “the Plans”) under Part 26A of the Companies Act 2006 (to which I shall refer as “Part 26A”). If the Plans are to be sanctioned, it is necessary, in circumstances which I shall come on to describe, for the Court to exercise its cross-class cram down powers, as these have become known.

2. The Plan Companies form part of the Turbo Group, which operates a builders’ merchants business in the United Kingdom selling building, heating, decorating, electrical, plumbing, timber and ancillary products to trade and retail customers. The Turbo Group has a network of 176 branches and employs approximately 2,000 people. Of particular relevance for present purposes, the Turbo Group Companies have a number of leases; and it is the number of those leases and landlords, and the differences between them, which have occasioned the only real area of complexity in this case, which is the multiplication of classes and the results of the convened meetings.

3. The Turbo Group has fallen into financial distress in recent years. I have described the circumstances of this in a judgment which I gave after a convening hearing held on 10 June, for which the reference is [2025] EWHC 1737 (Ch) . Suffice it to say that the liquidity position of the Turbo Group has become increasingly strained; cashflow forecasts suggest that it will run out of cash in early August 2025. (Mr Smith KC, who appeared for each of the Plan Companies, indicated the relevant date for that to be 4 August, if the Plans are not sanctioned.) The gearing of the company has also got, as it were, out of hand. It is clear, as I shall elaborate later, that there is no real alternative other than administration for all but one of the Plan Companies and liquidation for that other Plan Company. That would be, as I will describe, the relevant alternative, which is a corner piece of this legislation.

4. The Plans have three central features. First, the Plans will release approximately £200 million of the liabilities owing to the Plan Companies’ secured term loan lenders, whom I shall refer to as the “Secured Plan Creditors”. The remaining liabilities owing to the Secured Plan Creditors will be amended and extended. The Secured Plan Creditors will also make available further loan facilities of up to £20 million to the Turbo Group, for which no charge is to be made nor any benefit separately sought. Secondly, the Plans will compromise the unsecured liabilities owing to the various classes of landlords, whom I shall call the “Landlord Creditors”. This has involved a division of the Landlord Creditors into various categories, which is in line with an approach taken in many other Part 26A plans which, again, I shall come on to describe shortly. Thirdly, the Plans will compromise certain unsecured liabilities owing to local authorities in respect of business rates, which I will call the “Business Rate Creditors”, and to various other unsecured creditors whom I shall call the “General Unsecured Creditors”.

5. It follows that the Plan creditors comprise the Secured Plan Creditors, the Landlord Creditors, the Business Rate Creditors and the General Unsecured Creditors. The Landlord Creditors, the Business Rate Creditors and the General Unsecured Creditors can be described together as the “Unsecured Plan Creditors”. It is helpful to make clear at the outset that the class of General Unsecured Creditors is comprised of various creditors with contingent or prospective claims. The creditors of the companies otherwise, though unsecured, are not included within the relevant Plan. Broadly speaking, they comprise the Revenue and the various persons on whom the companies variously rely as their ordinary creditors and who are needed in the course of any future trade and are to be paid in full or at least liabilities are not to be compromised under the Plans. The aim of all the Plans is to restore the Plan Companies to financial health so that the Turbo Group can continue trading as a going concern.

6. As I have indicated, I have set out much of the relevant background to this hearing in the judgment I gave in relation to the hearing on 10 June, where I convened a total of 68 meetings, which I shall call the “Plan Meetings”, of the following classes of Plan creditors. First, a single class of Secured Plan Creditors. Second, five classes of Landlord Creditors in each of the Plan Companies, the basis of the separate classes being that the Landlord Creditors have different rights under the Plans. The five classes are the Class A landlords, the Class B1 landlords, the Class B2 landlords, the Class C1 landlords and the Class C2 landlords. It is obvious from a simple multiplication of those five classes by the 13 Plan Companies that a great many class meetings had to be orchestrated. Thirdly, there is a single class of the Business Rate Creditors and a single class of the General Unsecured Creditors. Again, details as regards the composition of these classes and as to the directions for the meetings which were held are described in some detail in my convening judgment.

7. Generally, in this judgment, I shall seek to focus on events since the convening hearing, especially, of course, on the class meetings which were held; but it may assist for me to clear out of the way at this point the various matters which I need to address in the exercise of my jurisdiction and to confirm that I am entirely satisfied that the class meetings were properly constituted, were validly convened and held on proper notice and adequate information. Therefore, the matters which were instantly in issue at the convening judgment and of which I was satisfied at the time had been satisfactorily confirmed by later events.

8. The Plan Meetings which I had directed took place on 2 and 3 July, spread over two days given the number of them. In summary, the Plans were approved by the Secured Plan Creditors in respect of all 13 Plans, in other words with each of the 13 Plan Companies, along with a total of 21 other classes spread across the various classes of Unsecured Plan Creditors. They were the assenting creditors, whose assent is, of course, relevant not only in terms of whether it has legal consequence but also in terms of whether it is the platform for the exercise of a cross-class cram down power. In that regard, the Plans were not approved by the other classes of Unsecured Plan Creditors.

9. In terms of number, that suggests a great many non-assenting classes; but drilling down a little bit, the vast majority of the dissenting classes were in fact classes in which no one attended the relevant Plan Meeting. I am satisfied that that non-attendance was not the consequences of any notification failure, having explained in my convening judgment the efforts which were made to ensure notification of the convening hearing which were then, as it were, mirrored in the efforts to ensure that the notices of the meeting which I directed should be held but also brought to the attention of the relevant stakeholders. Having excluded some notification failure, the only two possibilities are that either the relevant Plan Creditors intended to imply their wholehearted objection or that they were apathetically indifferent to the result given the treatment of them under the Plans.

10. I am satisfied, as was submitted to me by Mr Smith, that their non-attendance and non-voting did not indicate antipathy or objection, but what might be called apathy or indifference, given the provisions for them made by the various Plans. I should make plain in that context that no Plan Creditor has put forward any form of alternative deal which the Court might need to compare to the Plans and indeed, as I understand it, no objections have been advanced in correspondence which have not been addressed or which remain outstanding and there was no opposition at the hearing before me.

11. Assuming that the reader has also read my judgment after the convening hearing, and reiterating that I am entirely satisfied that the relevant alternative to the Plans is administration in the case of all but one of the Plan Companies, and liquidation in the case of the other, I turn to the results of the various meetings which were held. I have already indicated that, in the case of each Plan Company, 100% of the Secured Plan Creditors and 100% of Class A Creditors all approved 100% the Plan. As to the Landlord Creditors, divided into the five classes which I have described, the results of their meetings were set out in some detail in the evidence and are summarised in the Appendix to this judgment. The long and the short of it is that given that the Secured Plan Creditors unanimously approved the Plans with at least one assenting in the money class for all the 13 Plan Companies, thus conferring jurisdiction on me, if satisfied that I should exercise the Court’s cross class cram down power as regards the non-assenting classes to enable the Plans to proceed.

12. In addition to the Secured Plan Creditors, 21 other classes voted in favour of the Plans. These include all but two of the classes of Class A landlords and a significant number of the other classes of Unsecured Plan Creditors, including various classes within the Class B1 landlords, which is, as I understand it, landlords in respect of the premises which the companies need to operate, and the Class B2 landlords, the Class C1 landlords and the Business Rate Creditors. The dissenting classes consist of the other classes of Unsecured Plan Creditors, in total amounting to 34 dissenting classes. However, the vast majority of the so-called dissenting classes, indeed 31 out of the 34 of them, did not have any creditors who voted either for or against the Plan but under the principle set out in Re Listrac Midco Ltd [2023] EWHC 460 (Ch) , at paragraph 40 in the judgment of Adam Johnson J, they are nevertheless treated necessarily as voting against purposes of establishing how the Court is to view their position.

13. That means that only three of the 34 dissenting Plan Meetings out of a total of 68 Plan Meetings dissented. The only active dissents, as I understand it, were in the business rates unsecured class for Grant & Stone Limited, one of the Plan Companies; the Class C2 landlords in the Dougfield Plumbers Supplies Limited class meeting of C2 landlords; and the business rates unsecured of Grant & Stone Limited likewise.

14. The result is that a total of 144 Plan Creditors cast a vote at the Plan Meetings, in person or by proxy, of which 140 cast a vote. Of those who cast a vote, 99.8% in value voted in favour of the Plans. This is, in a sense, not an appropriate figure in that its emphasis might tend to undermine the whole purpose of having classes but, as a general matter, it indicates a commercial approval of the Plans in general terms.

15. Focusing on the landlords, only one Class C2 landlord voted against the Plans. That was in the C2 landlord class of Dougfield Plumbers Supplies Limited, where 100% voted against but was comprised of a single landlord who was obviously not content with the Plans. I have enquired whether any of the dissenting creditors who cast a vote against explained their reasoning for their objection but I understand that that information is not available and no particular reason has been ascertained. In the round, I am satisfied that there is a very high degree of support for each of the Plans amongst those who participated in the Plan Meetings and that the non-attendance of so many does, as Mr Smith submitted, indicate indifference rather than an objection.

16. I turn to the Court’s power to sanction the Plans. I first deal with the issue of sanction of the Plans as regards the assenting classes. This is reasonably straightforward in that it is well-trodden ground. It is plain that in the case of the assenting classes, the only question is whether the assent was in some way vitiated notwithstanding the unanimous approval of the Plans by those assenting classes. I am satisfied that there is no reason to consider their votes to have been vitiated by any extraneous and improper consideration. I do not regard them as having cast their vote simply to, as it were, provide a platform for cramming down. It seems that they expressed their votes because the Plan provides sufficient benefits for them. It seems to me, in those circumstances, that there is no reason for the Court to depart from the view of what is often called the “regiment” comprised of the majority within the class, in this case 100%, and there is no difficulty in, accordingly, the usual principles in sanctioning the Plan as against the assenting classes.

17. The more difficult question is whether the Plan should be sanctioned as against the dissenting classes. I enquired of Mr Smith whether he had ever come across so many dissenting classes and he indicated that he had not. He submitted nevertheless that the question is not the complexity thereby introduced, but whether there is a legal problem to which this gives rise.

18. The jurisdiction to exercise the cross-class cram down power is conditioned on the satisfaction of what is known as “Condition A”, a “no worse off test”, provided for in section 903G, and the “Condition B” test, which requires that each Plan has been approved by the requisite statutory majority of at least one in the money class, that is to say a class that would have a genuine economic interest in the company or receive a payment in the relevant alternative.

19. I shall deal with each condition in turn. Condition A, the no worse off test, seems to me to be satisfied in this case. It seems to me clear that all of the Unsecured Plan Creditors will be better off under the Plans than they would be in what I have accepted to be the relevant alternative. Indeed, as Mr Smith submitted, this is, in a sense, a logical consequence of the design of the Plans, which secures an additional benefit, I think 175%, over and above what they would receive in the administration or liquidation. It follows that by reference to this uplift, that not only would the relevant creditors be no worse off but they will be better off than they would be in the relevant alternative. That conclusion has been supported by the unchallenged expert evidence produced by a very experienced insolvency practitioner and I accept that evidence.

20. The position as regards the landlords needs to be addressed separately and carefully in that there is differential in terms of their rights and therefore, logically, in terms of their treatment. As for the Class A landlords, known as such because the leases are, as it were, beneficial leases. The Class A leases, in the relevant alternative, would be transferred in a pre-pack administration to a purchaser. If any Class A landlord was unhappy with this arrangement, then it could forfeit its lease and relet the property and, in that case, the landlord would rank as an unsecured creditor for any previous rent due.

21. I need to compare the position under the relevant alternative with the position under the Plans. As regards that, the Plans do not reduce the contractual rent payable on the Class A leases. The Plan Companies will continue to pay the contractual rent in full. The only difference is that the rent will, instead of being paid quarterly in advance, be paid monthly. That shift to monthly rent should help to manage the Plan Companies’ cashflow but it is difficult to see why it should be objected to and it has not been objected to by any of the Class A landlords.

22. Secondly, the Plans do not affect the Class A landlords’ right of forfeiture, for example those arising out of an insolvency event triggered by proposing a compromise arrangement, which is a standard forfeiture term in those commercial leases. That right is left in place. If any Class A landlord wishes to forfeit in order to relet the property to a new tenant in the hope that the terms of a new lease might be more favourable, then the Plans do not stand in the way. As a matter of fact, no Class A landlord has sought to forfeit or to propose any other arrangement for termination of the lease.

23. Absent forfeiture, the Plans, thirdly, require the Class A landlords to accept a compromised liability payment for any liabilities owing to them and all non-rental liabilities will not be compromised. The compromised liability payment is in excess of what could be reasonably obtained in the administration or liquidation. In the event of forfeiture, all claims of the relevant Class A landlord will be compromised in return for what is called a compromised liability payment. That payment involves a 75% uplift on the dividend that would be received in the relevant alternative, which is ex hypothesi better than the dividend that would be received in the relevant alternative.

24. Turning to the Class B1 landlords, their position in the relevant alternative is explained in the relevant alternative report as follows: “The Class B1 Site, the Polegate head office comprising five leases, would likely be maintained under licence whilst Management either negotiated a reduced rental obligation or planned transfer of head office to a new site. I would anticipate that Management would attempt to reduce costs and could exit in a shorter timeframe (by 30 September 2025)”.

25. That position, in the relevant alternative, is mirrored by the Plans. In the case of the Class B1 leases, there will be no reduction of the rent payable. Service charges will be paid in full. The Plans will simply insert a new tenant break right, exercisable on the first anniversary of the restructuring effective date. This is more favourable to the Class B1 landlords than the position in the relevant alternative, where the exit would take place in a shorter timeframe, that is to say by 30 September 2025. As with the Class A landlords, the Plans do not affect existing rights of forfeiture and the Plans will confer new break rights on the Class B1 landlords so that the Class B1 landlords will be entitled to recover their property if they consider that is what they wish to do. Again, in the event of forfeiture or termination, all claims to the relevant Class B1 landlord will be compromised and returned for a compromised liability payment. That is necessarily better, by reference to its design, than the dividend that would be received in the relevant alternative.

26. The position as regards the Class B2, C1 and C2 landlords is distinct. In the relevant alternative, these leases would not be transferred to a purchaser. The landlords would therefore be left with an unsecured claim for rent, service charges, dilapidations, etc. Each landlord would also be entitled to forfeit the lease and relet the premises to a new tenant. Under the Plans, by way of comparison to the relevant alternative, the leases in Classes B2, C1 and C2 will be subject to heavier modifications than those that apply to Classes A1 and B1 because those modifications are necessary to make it commercial for their continuation if the Plan is sanctioned and the business operations continue. These modifications range from a 50% rent reduction in the case of Class B2 to a wholesale compromise of all rent and other liabilities, such as dilapidations and service charges, in the case of Classes C1 and C2. Mr Smith submitted that the key point is that all of the Landlord Creditors in Class B2, C1 and C2 will be given an express right to terminate their leases. These new termination rights then exist in addition to any existing rights of forfeiture. Thus, if any Landlord Creditor wishes to take its property back and relet the property to a new tenant, it is fully entitled to do so.

27. In the case of Classes C1 and C2, where the rent is reduced to zero, the Landlord Creditors are naturally expected to exercise their rights to terminate their lease. How quickly they do so will probably depend on whether they wish to keep the relevant leases alive whilst they look for alternative tenants to ensure that the relevant Landlord Creditor is not required to pay business rates in any lengthy void period if a new tenant proves difficult to find.

28. In the case of Classes B1 and B2, an immediate termination seems less likely because the Class B1 landlords will continue to receive contractual rent in full and they will only exercise their break rights if they are dissatisfied with the new tenant break rights created by the Plan. The Class B2 landlords will receive 50% of contractual rent and they will only exercise their break rights if they believe that they can relet their properties for higher rent than that in the market.

29. The skeleton argument pointed out that there is no need for me to decide whether the termination in any given lease is likely or unlikely. The key point is that every lease in these classes can be terminated if the landlord so wishes, thus leaving the commercial decision where it properly lies, with the relevant landlord. Secured claims of the landlords in these classes will be compromised in return for the compromised liability payment which, as I have explained, is necessarily better than the dividend that would be received in the relevant alternative.

30. Similar remarks apply to the Business Rate Creditors and the General Unsecured Creditors. In short, to the extent that the Plans compromise the claims held by such creditors, the quid pro quo is that compromised liability payments are necessarily better than the dividends which would be received by them in the relevant alternative.

31. It is submitted, and I accept, that in these circumstances, each of the Plans satisfies Condition A. Each class of dissenting creditors will be no worse off under the Plans than they would be in the relevant alternative and I note that no dissenting creditor has suggested otherwise. This conclusion is in accordance with similar conclusions reached in other cases dealing with the position of landlords, it being important to stress, as I have, I hope, done so that it is not within my jurisdiction to remove proprietary rights and hence the scheme is designed so as to get there another way. I have asked Mr Smith whether the resort to such mechanics as zero rent has raised eyebrows. His answer was to the effect that, although it had occasioned scrutiny, it was not a matter which had been considered to be beyond or to deprive the Court of jurisdiction; of course, fairness is the more general matter to which I will return in due course.

32. Condition B of the preconditions to the exercise of cross-class cram down requires that each Plan has been approved by the requisite statutory majority of at least one in the money class. Condition B is obviously satisfied by virtue of the fact that all 13 of the Plans were approved by the Secured Plan Creditors. It is important to stress that there is an assenting class in each of the 13 Plan Companies.

33. According to the unchallenged relevant alternative report, the Secured Plan Creditors would receive a total return of 12p/£ to 15p/£ in the relevant alternative, principally resulting from their credit bid acquisition of the Turbo Group’s business, which would be likely in that context. By way of explanation to that, such is the extent of the secured debt that the Secured Plan Creditors would be in a position to make an offer far in excess of the likely enterprise value of the assets concerned. The range of 12p/£ to 15p/£ represents the quantum of secured debt that would be paid by way of setoff as the price for the transfer of the Class A leases and other associated assets.

34. Thus, in the relevant alternative, the Secured Plan Creditors would receive a payment in respect of their claims and would have a genuine economic interest in the Plan Companies. That is plainly sufficient, I accept, to satisfy Condition B.

35. The gateway conditions are thus satisfied and I must move to the issue of my discretion. As in the case of schemes of arrangement pursuant to Part 26 of the Companies Act 2006 , in the context of restructuring plans under Part 26A the Court’s discretion whether or not to give its sanction are broad.

36. However, whereas in the context of schemes of arrangement the relevant principles or criteria are reasonably well-established (and the Court can, and usually does, place considerable reliance on the assessment of overall fairness implicit in a vote approving the scheme unless it has reason to doubt the reliability of the vote as a genuine indication of the interests of the class), in the context of restructuring plans where a cross class cram down order is sought, the assessment of fairness is more difficult. In that context, the Court is being invited to impose a plan on a class which, ex hypothesi , has voted against the proposal.

37. This is a developing issue in the context of restructuring plans as a sequence of three Court of Appeal authorities has tended to reveal. That said, however, I should say in that regard that, although those cases have clarified how the Court’s discretion is to be exercised, the Plans do not really raise the difficult issues as to the fair distribution of any restructuring benefits which have been much pondered in that sequence of three cases from Re AGPS Bondco plc [2024] Bus LR 745 through Re Thames Water Utilities Holdings Ltd [2025] EWCA Civ 475 and on to Re Petrofac Ltd [2025] EWCA Civ 821 . I shall come on to explain why that is so in this case.

38. Mr Smith submitted that in considering the exercise of my discretion to sanction, I should ask four key questions. The first is whether the relevant Plan treat creditors of the same ranking in broadly the same way or, if not, is there good justification for any differential treatment? The second is whether the relevant Plan include any special benefits or incentives in the form of fees, new money entitlements and the like? If so, are they properly justified and explained? The third is whether the Plan Company has demonstrated that it has taken reasonable steps to consult with its creditors and to give genuine consideration to any alternative proposals that have been put forward, giving proper commercial reasons for rejecting any such alternative proposals rather than dictating or steamrolling ahead and ignoring its creditors’ views? The fourth is whether, in all the circumstances, the benefit of the restructuring been fairly allocated as between different groups of creditors.

39. The first question reflects the Court of Appeal’s decision in Re AGPS that the treatment of creditors under a plan should broadly reflect their position in the relevant alternative absent a good justification for differential treatment. The second point reflects the Court of Appeal’s decision in Re Petrofac that proper evidence must be adduced to satisfy any special benefit or incentive conferred. The third point reflects the Court of Appeal’s decision in Re AGPS that the Court must consider whether a better or fairer plan is available and the fourth point is the ultimate issue for the Court being the punchline which it must give at the end of its considerations.

40. As to the first question, whether the Plans treat creditors of the same ranking in broadly the same way or, if not, that there is a good justification for any differential treatment, Mr Smith has submitted that the answer is plainly “yes”. The Secured Plan Creditors are treated differently from the Unsecured Plan Creditors, but that obviously reflects the difference in their ranking of their claims. The Unsecured Plan Creditors are treated in broadly the same way. In so far as any of the Unsecured Plan Creditors is compromised by the Plans, the quid pro quo is essentially the same, that is to say the compromised liability payment. In the usual way, the Landlord Creditors have been placed into different categories by reference to the profitability of the relevant leased premises. The authorities establish that this is a fair way to treat landlords. It is unnecessary to decide whether the new terms of the leases set out in the Plans are better or worse than the Plans that might be available in the market, which might be a very difficult task. This was explained in the case of see Lazari Properties 2 Ltd v New Look Retailers Ltd [2021] Bus LR 915 at paragraphs 238 and 239 in the decision of Zacaroli J (as he then was) which is set out under paragraph 100 of the skeleton argument: “Finally, I should deal with the contention that in certain respects, the reduced rent under the CVA was below market rates. At an earlier stage in the proceedings, the applicants sought to argue that this was true of turnover rent payable generally to Category B Landlords. In the absence of any expert evidence as to market value, however, that was abandoned save in respect of a very small sub-category of Category B1 Landlords (in which a cap is placed on the turnover rent). In relation to Category C Landlords, it is accepted that the reduction of rent to nil, after the notice period, must have the effect of reducing it below market rates. In relation to rent falling due after the date the landlords could have terminated, however, the answer to the alleged unfairness lies—for the reasons given above—in the right to terminate. For the reasons already given, I do not accept that Norris J in Debenhams [2020] BCC 9 laid down a principle that modifications to a lease could not reduce the rent below market rates, certainly insofar as the period after the lease could have been terminated is concerned.”

41. As I mentioned earlier, certain creditors of the Plan Companies are to be excluded from the Plans, including Super Senior Lenders, various critical trade creditors, customers, employees, HMRC and a handful of landlords and other creditors with whom bilateral arrangements have been put in place. It is well established that the exclusion of creditors from a plan is perfectly legitimate providing the reasons for excluding them are not irrational or without any logical basis. The Explanatory Statement has set out the reasons for the exclusion of these various creditors and I am satisfied that they have been excluded on a proper basis and their exclusion is necessary for the functioning of the companies if the Plans are sanctioned and the companies are continuing in their restructured form.

42. The second question, whether the Plans include any special benefits or incentives in the form of fees, new money entitlements and the like, and, if so, whether they are properly justified and explained, is easily answered in this case. The Plans do not include any fees, incentives or special benefits of any kind beyond the basic deal summarised. In particular, no fees or incentives will be paid to any of the Secured Plan Creditors. The Secured Plan Creditors will inject up to £20 million in new money but they will not receive any special benefits for doing so. The new money will be injected under the new Opco Facilities, with a relatively modest interest of 5% above an interbank base rate called SONIA. Thus, the problem which arose in Re Petrofac that there was no evidence that the terms on which the new money was extended was commercially competitive does not arise.

43. As to the third question, which is whether the company has taken reasonable steps to consult with its creditors and to give genuine consideration to any alternative proposals being put forward, giving a proper reason if any is rejected, the answer urged on me is “yes”. Again, I accept that. I have set out in my convening judgment the efforts made to engage the various classes of Plan Creditors, including by town hall meetings, which Landlord Creditors were invited to attend by video call. They were not actual meetings because, as was somewhat demonstrated by the subsequent non-attendance at the various class meetings, it is not a matter of sufficient moment that they would go themselves to attend in person in all likelihood.

44. Over the last few weeks, the Plan Companies have apparently been contacted by a handful of Unsecured Plan Creditors asking questions about the Plans. I am told that all such questions were answered promptly and accurately and I am given an explanation of the Plan Companies efforts to engage with them in the second witness statement of Mr Stables in support of the application. He has explained that it is not possible to negotiate with the Unsecured Plan Creditors quite in the same way as a group of financial creditors but I am nevertheless satisfied by the efforts of engagement and proper treatment of any questions asked. As I noted previously, no Plan Creditors suggested any possible alternative to the Plan other than an insolvent collapse, nor have they put forward any objection or alternative on the footing of it. Mr Smith has submitted, in that case, that the onus, in any event, is on dissenting creditors to put forward an alternative deal if they genuinely wish to oppose the Plan and explain how it could be implemented. That may very well be but it is not a matter which I need further to address in the circumstances of the case of no objection or any rival proposal.

45. The fourth and last question is, in all these circumstances, has the benefit of the restructuring been fairly allocated as between different groups of creditors? Again, the answer urged on me is “yes”. In that regard, and I think, as a matter of caution in an otherwise clear case, the Plan Companies have put forward and rely on a Plan Benefits Report prepared by Mr Charters of Grant Thornton, who gave an earlier report and this further Plan Benefits Report being supplemental to it. That shows how the benefits of the restructuring will be shared between the Secured Plan Creditors and the Unsecured Plan Creditors. That is quite difficult to show in many cases but, in this case, it is relatively straightforward because the benefit, in a nutshell, is the costs saved by not pursuing a relevant alternative and the question is whether that benefit is, by reference to the contributions made, fairly allocated between the various classes concerned.

46. The Secured Plan Creditors will make the following contributions. They will write off £218 million of secured debt and they will provide up to £20 million of new money for which they receive no special fee nor any advantageous interest rate. From their perspective, the main benefit of the Plans is to avoid the cost of the pre-pack administration, which they estimate to amount to an upper figure of about £12.76 million. The gross costs saving of £12.76 million may be reduced to a net figure of £10.92 million. This is because the Secured Plan Creditors will need to fund additional payments of £1.84 million to the Unsecured Plan Creditors. The Unsecured Plan Creditors will contribute to the restructuring by writing off about £10.18 million of unsecured debt, far less than the secured debt written off by the Secured Plan Creditors, and, as is plain from the description, unsecured. From their perspective, the main benefit of the Plan is to obtain an uplift on the dividends that will be paid in the relevant alternative. They will receive a total uplift via the compromised liability payments made under the Plans of £1.84 million, as compared to the dividends they would receive in what I have accepted to be the relevant alternative.

47. The result is that the Plan benefits are shared in the following proportions: 85.6% to the Secured Plan Creditors and 14.4% to the Unsecured Creditors. This means that the Unsecured Plan Creditors will receive considerably more than their pro rata share of the benefit of the restructuring when measured against the nominal values of the parties’ contributions. If the benefit of the restructuring had been shared by reference to the nominal value of the parties’ contributions in the forms of claim written off or new money advanced, then the Secured Plan Creditors would have received a 95.9% share of the benefit and the Unsecured Plan Creditors would have received a share of only 4.1%. In addition, the nominal values do not reflect the fact that the Secured Plan Creditors’ claims rank in priority to the Unsecured Plan Creditors’ claims and that new money is a far more important contribution than the writing off an existing unsecured debt which may, in the circumstances, be entirely under water.

48. Accordingly, it is submitted, it can be seen that the Unsecured Plan Creditors will receive a good deal in comparison to the Secured Plan Creditors. It follows that the allocation of the benefit of the restructuring is entirely fair. I accept those submissions. It seems to me that the allocation of benefits in this case has been carefully considered and a result achieved which is conspicuously fair. It follows, therefore, that I sanction each of the 13 Plans with authorities for a rather extended judgment which will have to be amended in due course. (Judgment ends) - - - - - - - - - - Appendix A: Results of the Plan Meetings Plan Company Class of Plan Creditor Percentage in value of the relevant class of Plan Creditors present and voting (either in person or by proxy) at the Plan Meeting to approve the Restructuring Plan Approved / Not Approved Chandlers Building Supplies Holdings Limited Secured Plan Creditors Plan Meeting 100% Approved Chandlers Building Supplies Holdings Limited Class A Landlord Creditors Plan Meeting 0.0% Not Approved Chandlers Building Supplies Holdings Limited Business Rates Creditors Plan Meeting 0.0% Not Approved Chandlers Building Supplies Holdings Limited General Unsecured Creditors Plan Meeting - Chandlers Building Supplies Holdings Limited Secured Plan Creditors Plan Meeting 100% Approved Chandlers Building Supplies Holdings Limited Class A Landlord Creditors Plan Meeting 100% Approved Chandlers Building Supplies Holdings Limited Class C1 Landlord Creditors Plan Meeting 100% Approved Chandlers Building Supplies Holdings Limited Business Rates Creditors Plan Meeting 0.0% Not Approved Chandlers Building Supplies Holdings Limited General Unsecured Creditors Plan Meeting 0.0% Not Approved CRS Building Supplies Limited Secured Plan Creditors Plan Meeting 100% Approved CRS Building Supplies Limited Class A Landlord Creditors Plan Meeting 100% Approved CRS Building Supplies Limited General Unsecured Creditors Plan Meeting - Devondale Electrical Distributors Limited Secured Plan Creditors Plan Meeting 100% Approved Devondale Electrical Distributors Limited Class A Landlord Creditors Plan Meeting 100% Approved Devondale Electrical Distributors Limited Class C1 Landlord Creditors Plan Meeting 0% Not Approved Devondale Electrical Distributors Limited Business Rates Creditors Plan Meeting 100% Approved Devondale Electrical Distributors Limited General Unsecured Creditors Plan Meeting - Dougfield Plumbers Supplies Limited Secured Plan Creditors Plan Meeting 100% Approved Dougfield Plumbers Supplies Limited Class B2 Landlord Creditors Plan Meeting 0.0% Not Approved Dougfield Plumbers Supplies Limited Class C2 Landlord Creditors Plan Meeting 0.0% Not Approved Dougfield Plumbers Supplies Limited Business Rates Creditors Plan Meeting 0.0% Not Approved Dougfield Plumbers Supplies Limited General Unsecured Creditors Plan Meeting - Dougfield Plumbers Supplies Limited Class C1 Landlord Creditors Plan Meeting 0.0% Not Approved Dougfield Plumbers Supplies Limited Class A Landlord Creditors Plan Meeting 100% Approved Fairalls (Builders Merchants) Limited Business Rates Creditors Plan Meeting 0.0% Not Approved Fairalls (Builders Merchants) Limited General Unsecured Creditors Plan Meeting - Fairalls (Builders Merchants) Limited Class C1 Landlord Creditors Plan Meeting 0.0% Not Approved Fairalls (Builders Merchants) Limited Secured Plan Creditors Plan Meeting 100% Approved Grant & Stone Limited General Unsecured Creditors Plan Meeting 0.0% Not Approved Grant & Stone Limited Class B2 Landlord Creditors Plan Meeting 100% Approved Grant & Stone Limited Business Rates Creditor Plan Meeting 3.7% Not Approved Grant & Stone Limited Class C2 Landlord Creditors Plan Meeting 0% Not Approved Grant & Stone Limited Class C1 Landlord Creditors Plan Meeting 0% Not Approved Grant & Stone Limited Class A Landlord Creditors Plan Meeting 91.2% Approved Grant & Stone Limited Secured Plan Creditors Plan Meeting 100% Approved Parker Building Supplies Limited General Unsecured Creditors Plan Meeting 0.0% Not Approved Parker Building Supplies Limited Class B1 Landlord Creditors Plan Meeting 100% Approved Parker Building Supplies Limited Class B2 Landlord Creditors Plan Meeting 100% Approved Parker Building Supplies Limited Business Rates Creditors Plan Meeting 100% Approved Parker Building Supplies Limited Class C2 Landlord Creditors Plan Meeting 0.0% Not Approved Parker Building Supplies Limited Class C1 Landlord Creditors Plan Meeting 100% Approved Parker Building Supplies Limited Class A Landlord Creditors Plan Meeting 100% Approved Parker Building Supplies Limited Secured Plan Creditors Plan Meeting 100% Approved Pennyhill Timber Ltd Business Rates Creditors Plan Meeting 0.0% Not Approved Pennyhill Timber Ltd General Unsecured Creditors Plan Meeting - Pennyhill Timber Ltd Class C1 Landlord Creditors Plan Meeting 0.0% Not Approved Pennyhill Timber Ltd Class A Landlord Creditors Plan Meeting 0.0% Not Approved Pennyhill Timber Ltd Secured Plan Creditors Plan Meeting 100% Approved Rawle Gammon & Baker Holdings Limited Class B2 Landlord Creditors Plan Meeting 0.0% Not Approved Rawle Gammon & Baker Holdings Limited Business Rates Creditors Plan Meeting 100% Approved Rawle Gammon & Baker Holdings Limited Class C2 Landlord Creditors Plan Meeting 0.0% Not Approved Rawle Gammon & Baker Holdings Limited Class C1 Landlord Creditors Plan Meeting 89.4% Approved Rawle Gammon & Baker Holdings Limited General Unsecured Creditors Plan Meeting - Rawle Gammon & Baker Holdings Limited Class A Landlord Creditors Plan Meeting 100% Approved Rawle Gammon & Baker Holdings Limited Secured Plan Creditors Plan Meeting 100% Approved Sussex Plumbing Supplies Limited Business Rates Creditors Plan Meeting 100% Approved Sussex Plumbing Supplies Limited General Unsecured Creditors Plan Meeting - Sussex Plumbing Supplies Limited Class A Landlord Creditors Plan Meeting 100% Approved Sussex Plumbing Supplies Limited Secured Plan Creditors Plan Meeting 100% Approved Sussex Turnery & Moulding Company Limited Business Rates Creditors Plan Meeting 100% Approved Sussex Turnery & Moulding Company Limited General Unsecured Creditors Plan Meeting - Sussex Turnery & Moulding Company Limited Class A Landlord Creditors Plan Meeting 100% Approved Sussex Turnery & Moulding Company Limited Secured Plan Creditors Plan Meeting 100% Approved Total Plumbing Supplies Limited Business Rates Creditors Plan Meeting 0.0% Not Approved Total Plumbing Supplies Limited General Unsecured Creditors Plan Meeting - Total Plumbing Supplies Limited Class C1 Landlord Creditors Plan Meeting 0.0% Not Approved Total Plumbing Supplies Limited Class A Landlord Creditors Plan Meeting 100% Approved Total Plumbing Supplies Limited Secured Plan Creditors Plan Meeting 100% Approved - - - - - - - - - - (This Judgment has been approved by the Judge.) 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