SCUR-Alpha 1092 GmbH: High Court sanctions German group restructuring despite creditor objections

The High Court has sanctioned a scheme of arrangement for German holding company SCUR-Alpha 1092 GmbH, approving a restructuring that reduces the Schleich toy group’s debt from approximately €241 million to €166.6 million.

In Re SCUR-Alpha 1092 GmbH [2026] EWHC 2735 (BP), Mr Justice Hildyard concluded that the scheme was fair, had received informed creditor support and could be implemented without the Court acting in vain. The decision also addresses the use of trusts to hold restructuring entitlements for creditors affected by US sanctions.

The scheme was approved by 11 of the 13 creditors who attended and voted at the meeting on 22 September 2026. Those supporting it held approximately 80.9% of the value of votes cast. The dissenting creditors included MeSoFa Vermögensverwaltungs AG in Abwicklung, which held around 16% of the scheme liabilities.

The restructuring exchanges existing debt for new facilities, introduces €16 million of new money and provides for the waiver of remaining liabilities. It also transfers ownership of the group through a new holding structure to an autonomous Dutch foundation.

Court approves amendments and voting arrangements

The scheme had initially been considered at a convening hearing in June 2026. Subsequent developments included the abandonment of a proposed German restructuring procedure, known as StaRUG, and the introduction of a contingent debt subordination mechanism to address potential German tax liabilities.

The scheme documentation was amended accordingly, with a supplemental explanatory statement circulated to creditors six days before the vote. Although the judge considered the amendments material and expressed concern that the company had not returned to court for approval, he accepted that creditors had received sufficient information through the earlier documents, draft amendments and revised materials.

The court also retrospectively approved the company's decision to allow MeSoFa to vote. The UK Office of Financial Sanctions Implementation had confirmed that MeSoFa was not owned or controlled by its designated joint liquidator for the purposes of the relevant UK sanctions regulations. The judge found that extending voting rights had caused no prejudice and that the result would have remained unchanged even if MeSoFa's vote had been excluded.

Holding trust does not unlawfully enforce US sanctions

A central issue concerned the treatment of MeSoFa's entitlements under the restructuring. A US Office of Foreign Assets Control licence required property arising from the restructuring to be held on trust until MeSoFa ceased to be subject to US sanctions or obtained separate authorisation for its transfer.

MeSoFa argued that its own OFAC licence already permitted it to receive the benefits and that the trust was unnecessary. The company maintained that its licence did not authorise the other parties implementing the restructuring to transfer the property directly.

Mr Justice Hildyard rejected MeSoFa's objection. He held that the trust was a mechanism for accommodating restrictions affecting a creditor's ability to receive payment, rather than an attempt by the English court to enforce foreign public law indirectly.

The arrangement did not leave MeSoFa worse off than the sanctions restrictions themselves. Although the trust could continue indefinitely while the restrictions remained in place, a transfer to an alternative recipient would require separate OFAC authorisation, with the relevant property or proceeds remaining subject to the trust arrangements.

The judge also found no unfairness in the scheme's enhanced returns for creditors participating in new-money facilities. The opportunity to participate had been available to eligible creditors on equal terms, while MeSoFa's inability to participate arose from its liquidation rather than from the scheme.

Creditor's costs claim rejected

MeSoFa sought reimbursement of historical legal costs under clause 23.3 of the senior facilities agreement, alongside amendments to preserve its claim and protection against future costs.

The judge held that the costs did not fall within the contractual indemnity, which concerned enforcing or preserving a finance party's rights. The dispute related instead to MeSoFa's sanctions status. He also concluded that the court had no power to remove the scheme's release provision for the benefit of one creditor.

After the hearing, MeSoFa made further written submissions seeking costs. The judge considered the correspondence but declined to reopen the indemnity issue, finding that further proceedings risked jeopardising the planned restructuring timetable. Any separate application for costs could be determined later.

The court also resolved concerns about undertakings given by companies outside the scheme, after receiving confirmation that the undertakings had been expressly authorised and their consequences explained.

Mr Justice Hildyard concluded that the statutory requirements were satisfied, the scheme had been fairly represented and approved, and there was a reasonable prospect of recognition in Germany. He therefore sanctioned the scheme.