High Court sanctions restructuring schemes for Solar 21 firms

The High Court has sanctioned restructuring schemes for two companies in the Solar 21 renewable energy investment group.

Original proposals for restructuring the assets and liabilities of EFW 21 Renewable Energy Ltd and EFW 21 Renewable Energy (Ireland) Ltd initially attracted substantial controversy from investors and brokers whose clients invested in the companies.

There was no opposition on Tuesday to the sanctioning of the new schemes, which came to court after the overwhelming majority of investors voted in their favour at a meeting of creditors last month.

Mr Justice Michael Quinn was satisfied all of the requirements were met to allow him to sanction the proposals. There was no restriction or reason not to approve the plans, he said.

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The court heard earlier from barrister Stephen Brady, on behalf of three creditors who were neither consenting nor objecting to the schemes. His clients have initiated an application for the appointment of an inspector to investigate the affairs of the companies under section 747 of the Companies Act.

More than 30 brokers represented by Brian Conroy SC did not consent or object to the sanctioning.

Solar 21 raised some £209 million (€240 million) from Irish investors to build a waste-to-energy plant in Yorkshire in England. The EFW 21 companies abandoned the project, claiming it was no longer viable due to significant delays encountered after the planned technology provider went into administration in January 2020.

While seeking to resolve the issues, the EFW 21 firms provided loans to several other companies in the group for projects that went on to experience significant delays. The holdup in disposing of these projects, along with cash flow issues, prevented the repayment of the intercompany loans and investments, the firms claim.

In seeking the sanctioning on Tuesday, senior counsel for the companies, Lyndon MacCann, with Declan Murphy BL, instructed by Doug Smith of Addleshaw Goddard law firm, said the schemes before the court presented a “markedly better potential outcome” for creditors than if the companies were liquidated.

While subject to commercial risk, investors should receive some 94 per cent to 100 per cent of what they originally invested, Mr MacCann said. The dividends, which equate to about 72 per cent of what the investors are owed, would be payable after four years.

Mr MacCann also said the originally proposed schemes would see investors receive “multiples” of what they would receive under a liquidation, while the new plans before the court provide for “many more multiples”.

The schemes are contingent on the sale of assets connected to the firms’ two renewable energy plants in Britain.

Mr MacCann said the plans include a “strong and robust” new governance structure and enhanced level of supervision of the companies, including appointing restructuring expert Ken Fennell, of Interpath (Ireland), as an independent observer on the board of directors of each of the companies.

Achill Island native Michael Bradley will resign from his role as chief executive of Solar 21, which he cofounded with his brother Andrew. He will remain as a director but will grant a proxy in favour of the non-executive chairperson to vote on his behalf in any shareholder vote.

The schemes have been independently assessed by independent insolvency expert John McStay, of McStay Luby Chartered Accountants, who found they represent a better return for investors than the alternative liquidation scenario, the court heard.

Mr Justice Quinn said he will deliver a written judgment soon outlining his reasoning for sanctioning the schemes.