The High Court ordered meetings of creditors of EFW21 Renewable Energy Limited and EFW21 Renewable Energy (Ireland) Limited to consider proposed restructuring schemes, after concluding that the final circular was not so deficient that the meetings should be refused.
Mr Justice Michael Quinn’s ruling concerned the first, convening stage of the process under the Companies Act 2014. It did not approve the schemes or determine whether they were fair. If creditors approve them by the required majority, the proposals must still return to court for a separate sanction hearing.
The companies had sought one class meeting for investors in each company. Creditors initially opposed the applications, arguing that the circular lacked information required for an informed vote. After adjournments, revised scheme proposals and further disclosures, those creditors no longer pursued their objections to convening the meetings. The judge nevertheless considered their concerns as part of the court’s supervisory role.
The judgment describes substantial transfers of investor-raised funds within the group. The companies raised about £209.5 million for Project 1, an energy-from-waste development in Hull that was later cancelled after delays and other difficulties. The judgment says about £90.7 million was advanced to other group companies, including £76.9 million for the Tansterne biomass and Plaxton biogas projects. Those loans remained unpaid, leaving the scheme companies unable to meet investment maturities.
The companies’ directors said the intercompany loans were appropriate and in the companies’ interests. Creditors raised concerns about the use of funds, fees, the prospects of recovering money from promoters and the reliability of the alternative-outcome analysis. One investor’s description of the fund flows as a “Ponzi scheme” was an allegation recorded in the judgment, not a finding by the court.
The judge said an Alvarez & Marsal report and subsequent clarifications, including a new appendix to the circular, described the sources and uses of money. That satisfied the limited test at this stage: the circular was not manifestly deficient for enabling creditors to make an informed voting decision. He stressed that further questions, fact-finding or forensic examination could still arise elsewhere, and that the ruling did not shield the companies or their officers from accountability.
The revised proposals included increased prospective support from Green Zone Consulting. The judgment records an estimated combined contribution of £63.4 million from Green Zone and parent company Solar 21. The companies said recoveries could reach about 93.9% of principal invested; a third-party offer for two projects could potentially raise that to the full principal, but neither outcome was guaranteed.
The court also accepted one class for each company’s investors. It relied on undertakings from connected parties not to vote their relevant interests. The order allows creditors to consider and vote on the proposals; the court made no finding at this hearing on whether they should approve them.