Hogan Lovells advises ad hoc group of lenders on DTEK's successful schemes of arrangement

The Hogan Lovells’ London Restructuring team working on the matter was led by London partner Alex Kay with support from Celine Buttanshaw (Senior Associate), Jonny Morris (Associate), Ben Lewis (Associate), India Maddison (Trainee) and Chiraag Thadani (Trainee). They were assisted by partners in the Netherlands, Wouter Jongen and Manon Cordewener, and Dylan Goedegebuure (Counsel) and Yvette Voermans (Associate), together with UK tax assistance from Philip Harle (Partner) and Aaron Burchell (Counsel) and Dutch tax assistance from Alexander Fortuin (Counsel) and Matthijs Dols (Senior Tax Advisor).

Alex Kay (Partner) says, ”It’s a credit to the hard work of all those involved that these landmark schemes have been sanctioned with such a high level of creditor support despite the disruptive tactics deployed by certain minority creditors.  I hope that the amended capital structure provides DTEK Energy with a stable platform going forward”.

“This decision follows on from the Virgin Active and Smile Telecoms restructuring plans, and the New Look [and Regis] CVAs, as the latest in a line of market leading restructuring mandates on which the Hogan Lovells team has lead with a key role” added Tom Astle (Partner and Head of Restructuring).

The inter-conditional schemes of arrangement involved single creditor classes with one scheme for noteholders and another for lenders. Noteholders and Lenders will both receive new notes issued by DTEK Finance PLC on a par exchange for their existing debt holdings. In addition, Noteholders will receive new secured notes issued by DTEK Oil & Gas B.V. as part of their compromise arrangement.

At the voting meeting under each scheme, with over 90% of the lender class and almost 90% of the noteholder class in attendance, the schemes were approved with the unanimous approval of those in attendance leaving the dissenting creditors unsuccessful.

Key arguments raised by one of the dissenting creditors included that they should not be considered in the same class as the other lenders, and that insolvency was not the correct comparator when considering class composition. Further, in applying to the courts in Cyprus and Netherlands (leading to the granting of freezing orders in Cyprus and attachments placed on key assets in the Netherlands), the dissenting creditor argued that they had, as a result, differing rights of security which the other lenders did not benefit from. However, following the lifting of the freezing order in Cyprus (following the receipt of appropriate secured payments by DTEK) and the Dutch Courts’ approval of the lifting of the attachments in the Netherlands on 12 May 2021, the sanction hearing was held on 13 May 2021 with the schemes successfully sanctioned.

Details of the judge’s reasons to follow.