Home Shopping Europe - Case Update

The High Court has released its reasons for convening a single creditors’ meeting to vote on a scheme of arrangement for German online shopping group Home Shopping Europe (HSE), which has since been approved by creditors and sanctioned by the Court.

The scheme company, Luxembourg-incorporated HSE Finance S.à r.l., is an intermediate holding company in the HSE Group. The HSE Group sells a variety of products through television, online, and mobile platforms, offering a broad range of items including fashion, clothing, jewellery, beauty, home and living, cosmetics, cooking, and technology products to customers across Europe.

The HSE Group has faced a number of trading challenges in recent years due to, amongst other factors:

1. weakened consumer demand for discretionary products amid inflation, geopolitical tensions, and supply chain disruptions;

2. excess inventory stemming from overestimated post-pandemic growth;

3. rising shipping and logistics costs;

4. a 44% drop in adjusted bond EBITDA in the DACH region from 2021 to 2024; and

5. the loss of a key revenue stream following the low-value divestment of their Russian business in June 2024.

In addition, although no event of default had occurred, the evidence demonstrated that the company would not generate enough cash to repay €630 million owing under two series of debt notes due in October 2026, nor that it would be able to refinance the notes. As a result, the company put forth a scheme of arrangement under under Part 26 of the Companies Act 2006 to restructure the notes. The scheme aims to exchange the existing fixed-rate and floating-rate notes for a package including new senior secured notes, new PIK notes, and contingent value rights, all part of a broader group restructuring.

The Court convened a meeting of creditors, finding the scheme preferable to the relevant alternative—a director-led sale of the business within two months, failing which insolvency would likely ensue. Expert reports showed the scheme offered materially higher recoveries (51–64%) compared to the relevant alternative (36-47%).

A key issue was whether to convene a single class meeting for all noteholders. Although the fixed-rate and floating-rate notes had slightly different interest rates and payment dates, the Court found no material differences in rights under the scheme or the relevant alternative, concluding there was “more to unite than divide” the two potential classes of creditors and allowed a single creditor class.

In addition, the scheme had strong creditor backing—89% of noteholders had signed a lock-up agreement—and the restructuring would release claims against the scheme company and its guarantors, preventing ricochet claims. As a result, the Court convened a single meeting of creditors.

Since that time, creditors have reportedly approved the scheme, and the Court has also sanctioned the scheme. We’ll be watching for the Court’s reasons for doing so once released.

Read the decision HERE.

Professionals involved: Richard Fisher KC and Stefanie Wilkins of South Square (instructed by Latham & Watkins) for the company