High Court dismisses Kington's application in Thames Water restructuring case

Background

The High Court recently delivered a judgment in the case involving Kington SARL and Thames Water Utilities Holdings Limited, concerning a proposed restructuring plan under Part 26A of the Companies Act 2006. The case arose from Thames Water's serious financial difficulties, prompting the need for a restructuring plan supported by its senior creditors.

The Application

Kington, a member of the Class B ad hoc group of junior creditors, opposed the plan and sought to introduce expert evidence from a competition economist. The evidence was intended to address the competitive implications of a term within the restructuring plan known as the June Release Condition (JRC), which Kington argued infringed competition law.

Legal Arguments

Kington's argument centered on the assertion that the JRC allowed senior creditors to exert undue control over the recapitalisation process, potentially infringing both Chapter I and Chapter II prohibitions of the Competition Act 1998. They claimed that the JRC could restrict competition by object or effect and could constitute an abuse of dominance by the senior creditors.

Court's Analysis

Mr Justice Trower dismissed the application, finding that the proposed expert evidence was neither necessary nor helpful in resolving the proceedings. He noted that the evidence was speculative and inconclusive, failing to provide a clear market definition or a robust analysis of market power and dominance.

Timing and Procedural Concerns

The court also highlighted procedural concerns, noting that the application was made late in the process, leaving insufficient time for the respondent to prepare a response. The tight timetable for the sanction hearing and the need for a timely resolution of the restructuring plan were significant factors in the decision.

Implications for the Restructuring Plan

The decision allows Thames Water to proceed with its restructuring plan without the delay that would have resulted from introducing the expert evidence. The court's ruling underscores the importance of timely and well-substantiated applications in complex financial restructuring cases.

Conclusion

This case highlights the challenges faced by junior creditors in opposing restructuring plans and the stringent requirements for introducing expert evidence in court proceedings. The judgment serves as a reminder of the need for clarity and precision in legal arguments, particularly in cases involving competition law.

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