Avanti Communications Group Plc and Avanti Communications Limited

Avanti Communications Group Plc and Avanti Communications Limited (the “Companies“), which provided satellite technology across Europe, the Middle East and Africa, entered administration on 13 April 2022. Matthew Callaghan, Lisa Rickelton and Ali Khaki of FTI were appointed as Joint Administrators.

Shortly after the appointment, the Joint Administrators effected a pre-pack sale of the Companies to Plate Bidco 4 Limited, a vehicle owned by the Companies’ debt and noteholders, who have a shared security package over the Companies.

The consideration was $190m, part of which was made up of existing debt being novated to the purchaser, which in effect constituted a first fixed and floating distribution of 100c/$ to creditors making up the relevant tranches of debt.

The distributions were made on the basis that certain assets sold were subject to fixed charge security, and that these proceeds were due to the fixed charge holders. The assets sold related to inter-company receivables arising from pre-appointment asset transfers by the directors in order to ensure operational continuity.

It was agreed that the Joint Administrators would seek directions from the Court as to whether the assets were subject to fixed or floating charge security. In the event that they turn out to be subject to a floating charge, fixed charge realisations, and correspondingly distributions, to date will have been overstated.

In order to ensure adequate protection for creditors who rank ahead of floating charge creditors (HRMC as preferential creditor and unsecured creditors up to the Prescribed Part limit under Section 176A of the Insolvency Act 1986), the Joint Administrators have access to a specific funding facility, which can be drawn down in the event of a security recharacterisation.

In such a situation, preferential amounts due to HMRC and the Prescribed Part can be drawn as cash and paid to the relevant creditors. As this cash in effect comes from the creditors that received a fixed charge distribution already, this is akin to a repayment of the proceeds to the Administration estate for redistribution in accordance with the waterfall applying if the assets were floating charge.

The determination hearing is set for January 2023, with judgement expected later in the year.

Solicitors from Simpson Thacher & Bartlett are assisting the Joint Administrators.

The Joint Administrators’ Progress Report can be found HERE.