Enzen - Case Update

Enzen Global Limited and Enzen Limited have secured sanction of their Part 26A restructuring plans after appearing in court earlier this week, at a hearing where HMRC appeared to voice its support for the plans — a marked shift in the tax authority’s earlier policy.

The companies are part of the larger Enzen Group, which provides advisory and operational services to energy and water utilities. The companies had fallen into significant financial difficulty due to a combination of factors, including the adverse effects of the COVID-19 pandemic, overambitious international expansion without sufficient capital backing, and high levels of unmanageable debt. These issues led to cash flow problems, defaults on financing agreements, reputational damage, and the presentation of winding-up petitions and expensive litigation.

Late last month, the court convened meetings of the companies’ creditors to vote on the Part 26A restructuring plans to restructure the companies’ secured and unsecured debts and avoid a formal insolvency process. The proposed plans included amending and extending existing financing arrangements, a debt-for-equity swap, and compromising unsecured debts (except those owed to "critical" suppliers and employees, who were excluded from the compromise and would be paid in full). HMRC, as a secondary preferential creditor, was to receive partial repayment, while most unsecured and subordinated creditors would receive only nominal or minimal returns.

The court sanctioned the plan after the hearing earlier this week. For the first time, HMRC voted in favour of the plans and made a specific representation in court that it will fully participate in restructuring plans going forward where it is necessary and desirable for HMRC to do so.

Professionals involved:

• AlixPartners acted as the lead financial advisor, with project leads Ben Browne, Richard Harrison and Marcus Fletcher

• Adam Al-Attar KC and Stefanie Wilkins of South Square (instructed by Simmons & Simmons) represented the companies at the convening hearing

• Charlotte Cooke of South Square (instructed by Paul Hastings) acted for the secured creditors at the convening hearing

• George Hobson acted for HMRC at the convening hearing