Key point

Changing the governing law of a credit agreement or loan notes to English law helps to form a basis to implement an English scheme of arrangement.

The facts

DTEK, a dutch company, applied to the English court for sanction of a scheme of arrangement relating to loan notes originally governed by New York law but in the run up to the scheme changed to English law. It was acknowledged that this was to create sufficient connection to England for the purposes of basing jurisdiction for English Court to consider and sanction a scheme of arrangement.  

The decision

The court sanctioned the scheme.  There was sufficient connection to England to give the court jurisdiction, and the court (amongst other things) made the following points and relied on the following: 

  • The change to English governing law provided sufficient connection even though the change was only effective two weeks earlier.   
  • In addition, the company has its centre of main interests ("COMI") in England.  It is irrelevant that the change in COMI was driven to establish connection to the jurisdiction.   
  • The court received evidence that other impacted jurisdictions would recognise the scheme (legal opinions had been provided from the Netherlands where DTEK was registered, Ukraine where DTEK's group operated and where the guarantors of the loan notes were based, and an application for recognition under Chapter 15 for recognition of the scheme would be made in the US).  

Comment

DTEK took a comprehensive approach to ensuring sufficient connection was established, perhaps taking into account the comments made by the court in the recent case of Re Apcoa Parking Holdings GmbH

Re DTEK Finance BV