The High Court has sanctioned restructuring schemes for EFW 21 Renewable Energy Limited and EFW 21 Renewable Energy (Ireland) Limited, extending investor repayment dates by four years after the schemes take effect. The court said the schemes offered investors a better expected return than liquidation, but did not decide allegations about how their money had been used.
Mr Justice Michael Quinn delivered his reasons on 7 December 2023, after sanctioning both schemes at a hearing on 14 November. No party opposed sanction at that hearing. The court’s decision concerned the statutory requirements for the schemes and whether they should be sanctioned; it did not determine claims of wrongdoing by the companies, their promoters or others.
The companies had raised about £209.5 million to fund an energy-from-waste project in Hull, England. After that project was cancelled, they had also advanced £90.7 million to other companies in the group, including £76.9 million for biomass and biogas projects. Those loans were not repaid, leaving the companies unable to meet investment obligations as they fell due. The companies maintained that the loans were proper and in the scheme companies’ interests. They and their promoters denied wrongdoing.
Under the schemes, assets and projects across the group are to be realised, with proceeds applied to investor repayments. The arrangements also provide for a restructuring supervisor, an investor liaison committee, a new non-executive chair and a board observer. Investors’ recourse is limited to payments secured by the schemes. The schemes release a range of claims against the companies and associated parties, while exempting claims concerning fraud, gross negligence or wilful misconduct. Such claims are stayed for three years, with applicable limitation periods also suspended for that period.
At the October meetings, 99.89% by number of EFW21 loan note holders who voted supported the scheme; one holder voted against. All EFW21 IRL preference shareholders who voted supported that company’s scheme. The judge found the meetings properly convened, the required majorities achieved, and the investor classes appropriately constituted. He also found no improper voting pressure and concluded that investors acting in their own interests could reasonably approve the schemes.
The court cited projected scheme recoveries of up to 93.9% of original investment, compared with estimated liquidation recoveries of about 12%. These were projections, dependent on successful implementation and asset realisations, not guaranteed returns. The judge said the sanction decision did not preclude remedies that may otherwise be available to investors. A separate application by an investor for inspectors to investigate EFW21 was listed for a later hearing; it was not decided in this judgment.