Thames Water faces wait to discover if restructure approval will be overturned

Thames Water must wait to discover whether the approval of a plan to restructure the struggling utility will be overturned at the Court of Appeal.

In February, a High Court judge sanctioned a plan proposed by Thames Water Utilities Holdings Limited (TWUH), the parent company of Thames Water Group, allowing the utility to stay afloat just weeks before it was due to run out of money.

A group of the utility’s secondary creditors, as well as TWUH’s parent company, Thames Water Limited (TWL), appealed against the decision at a hearing which began on Tuesday.

Liberal Democrat MP Charlie Maynard also appealed against the ruling, claiming that the company should instead be placed into special administration (SAR) to better serve customer interests.

At the end of the hearing on Thursday, Sir Julian Flaux, sitting with Sir Nicholas Patten and Lord Justice Zacaroli, said that they would hand down their judgment in writing at a later date.

He added: “We will do the best we can to give you an answer to whether the appeal is allowed or dismissed, hopefully during the course of next week.”

Andrew Thornton KC, for TWL, previously told the court in written submissions that the approved plan was “designed by senior lenders for the benefit of senior lenders”.

He said that the terms of the plan were “mispriced and inappropriate”.

He continued that the judge, Mr Justice Leech, “failed to apply the correct principles” when making his decision to approve the scheme, and therefore “wrongly exercised his discretion to sanction the plan”.

TWUH and its Class A creditors are opposing the appeal, with Tom Smith KC, for TWUH, stating in written submissions that the Court of Appeal should not interfere with the decision “unless compelled to do so”.

Barristers for Mr Maynard, the MP for Witney in Oxfordshire, previously told the High Court that allowing the company to enter SAR was a “better and fairer course” which served “the public interest and customers’ interests”.

William Day, for the MP, told the court in written submissions: “The plan should be rejected on the basis that its terms and cost are much worse for the Thames Water Group, in particular, TWUL, than rescue by special administration.”

Thames Water serves about 16 million customers – about 25% of the UK’s population – and owns more than 20,000 miles of water mains and more than 68,000 miles of sewers across London, the Thames Valley and the Home Counties.

The High Court previously heard that the restructuring is intended to be an interim measure to keep the utility running before a substantive restructuring due later this year.