Houst part 26A Restructuring Plan update from Reorg's EMEA Middle Market team.
The English High Court today sanctioned the part 26A restructuring plan proposed on behalf of Houst, a U.K-based hosting and management platform for Airbnb and other sites, and its subsidiaries, according to a statement from its advisors Irwin Mitchell.
Today’s decision is considered to be the first use of the restructuring tool, which was introduced two years ago, by an SME in distress. It is also the first occasion that the Restructuring Plan procedure has included the cross-class cramdown of HMRC, the dissenting secondary preferential creditor in this case.
Introduced into Part 26A of the Companies Act 2006 by the Corporate Insolvency and Governance Act 2020, restructuring plans constitute a compromise between a company and its stakeholders and result in a reduction or reshaping of the liabilities owed to those stakeholders. Restructuring Plans allow for dissenting classes of stakeholders to be bound in certain circumstances - known as cross-class cramdown.
The ruling by Justice Zacaroli today follows a two-stage decision: the convening hearing in June and sanction hearing on 15 July; as well as further written evidence requested by the Court at the sanction stage to address particular points, including further details to support the findings in the financial report in support of the restructuring plan.
Houst, previously known as Airsorted, is backed largely by venture capital and institutional investors including Seedrs, which provided equity crowdfunding. The group was unable to service its current loan obligations to Clydesdale. Further, three of its creditor classes (including HMRC, a previous landlord and a former call center provider), had presented statutory demands and were threatening to issue winding-up petitions.
Counsel Marcus Haywood of South Square was instructed by Irwin Mitchell’s restructuring and insolvency team, and the company was assisted by Begbies Traynor Group in their capacity as plan administrators.