A&O advises Virgin Active as the group’s Part 26A restructuring plans are approved by Mr Justice Snowden in landmark judgment
12 May 2021
Mr Justice Snowden has just handed down his landmark judgment sanctioning the Virgin Active group’s three inter-conditional Part 26A restructuring plans (the "Plans").
The Plan Companies appeared by counsel (Tom Smith QC, Ryan Perkins and Lottie Pyper) at the sanction hearing, instructed by Allen & Overy (Earl Griffith, Susanna Charlwood and Hannah Valintine). A sub-set of the Secured Creditors appeared by counsel (David Allison QC) at the hearing to support the sanction of the Plans, instructed by Hogan Lovells. A sub-set of the Landlords (the so-called AHG Landlords) appeared by counsel (Robin Dicker QC and Georgina Peters) at the hearing to oppose the sanction of the Plans, instructed by Sullivan & Cromwell. A link to the sanction judgment can be found here: see  EWHC 1246 (Ch).
Mr Justice Snowden previously handed down two judgments in connection with the Plans. On 1 April 2021, he handed down a judgment explaining his decision to convene class meetings of creditors for each of the Plan Companies (the "Convening Judgment"): see  EWHC 814 (Ch). On 16 April 2021, he handed down a judgment in connection with the ability of certain creditors to recover their costs (the "Costs Judgment"), a question which he reserved until after the conclusion of the sanction hearing: see  EWHC 911 (Ch).
In a lengthy, well-reasoned and thorough sanction hearing judgment (the "Sanction Judgment"), Mr Justice Snowden sanctions the Plans in the terms sought by Counsel and Allen & Overy. In summary, Mr Justice Snowden concludes that:
- Each Plan Company has encountered financial difficulties that are affecting its ability to carry on business as a going concern.
- Each Plan is a compromise or arrangement between the relevant Plan Company and certain of its creditors, the purpose of which is to eliminate, reduce or prevent, or mitigate the effect of, those financial difficulties.
- The relevant alternative to the Plans would, in each case, be entry into administration followed by an accelerated sale of the businesses of the Plan Companies.
- If the Plans are sanctioned, no member of a dissenting class will be any worse off than they would be in the relevant alternative.
- The Plans have been agreed by a number representing 75% in value of a class of creditors, present and voting, who would receive a payment, or have a genuine economic interest in the company, in the event of the relevant alternative.
- In all the circumstances, the Court should exercise its discretion to sanction the Plans.
The core Allen & Overy restructuring team comprised Earl Griffith, Hannah Valintine, Jasmine Norris, Philip Wells and Mark Pugh. The restructuring team worked closely with Allen & Overy’s litigation team led by Susanna Charlwood together with Oli Rule, Edward Levy, Nick Barnard and Nick Wright (PeerPoint), banking team led by Jon Bevan together with Graham Knight, Danielle Hyde and Megan Chen-Schlote, and corporate team led by Claire Coppel and Jim Ford, together with Arthur Jebb, Zara Sproul, Poppy Kevelighan and George Luther.
Deloitte were financial adviser to the Virgin Active group on this landmark Part 26A restructuring plan and prepared the Relevant Alternative Report. The Deloitte team included Henry Nicholson, Matt Smith, Matt Mawhinney, Callum Fyfe, Simon Hanks, Stuart Morris and Rohan Chacko.
Travers Smith also advised Virgin Active group on certain aspects of the restructuring. The Travers Smith team included Edward Smith, Kirsty Emery and Natalie Scoones.
Allen & Overy are extremely proud to have played a central role in helping to guide the Virgin Active group through its Covid-19 pandemic induced financial difficulties and the Part 26A restructuring plan process, which included amongst other things a three day contested convening hearing, a costs hearing and a five day contested sanction hearing. We look forward to concluding the solvent restructuring of the Virgin Active group, and want to be among the first to wish the Virgin Active group directors, management, employees, club members and all other stakeholders all the very best for a successful future.