Re SCUR-Alpha 1092 GmbH – When Sanctions and Restructuring Collide
Christopher Snell of 33 Chambers, led by Nicholas Yeo KC and instructed by Gherson LLP, acted for MeSoFa Vermögensverwaltungs AG in Abwicklung in Re SCUR-Alpha 1092 GmbH [2026] EWHC 2735 (BP). Mr Justice Hildyard handed down judgment on 23 October 2026, sanctioning the Part 26 scheme of arrangement of the Schleich toy group.
MeSoFa is the single largest lender under the group's senior facilities agreement, holding around 16% of the scheme liabilities. It is in Austrian liquidation, and one of its joint liquidators is a UK-designated person. When the scheme was convened, it was assumed that sanctions would prevent MeSoFa from voting.
MeSoFa maintained that it was not owned or controlled by its designated liquidator. OFSI agreed. MeSoFa was then admitted to vote at the scheme meeting, and the court ordered that its admission be recorded in the sanction order.
Two sanctions regimes, one insolvent creditor
The scheme compromised English-law facilities owed by the group's German holding company, cutting total debt from €241m to €166.6m. MeSoFa's position engaged both the UK and US regimes.
UK. MeSoFa argued that it fell outside the ownership and control test in regulation 7 of the Russia (Sanctions) (EU Exit) Regulations 2019. The Scheme Company disputed this. On 2 July 2026 OFSI confirmed that the test was not met and MeSoFa was not subject to the UK asset freeze. OFSI revoked a licence previously granted for interest payments to MeSoFa, and no OFSI licence was needed for the restructuring [34], [95]. As the judge put it, MeSoFa's control submission had been answered in its favour by OFSI [8].
US. MeSoFa remains subject to US sanctions and holds its own OFAC wind-down licence. OFAC first licensed the restructuring on terms that MeSoFa's property be held in a blocked account at a US institution. That condition was replaced on 18 August 2026 by a requirement that the property be held by a holding period trustee [35]. The trust deed was then amended, in part to meet MeSoFa's comments [21].
Key take-aways
1. A designated office-holder does not automatically bring the estate within the asset freeze. OFSI accepted that a company in liquidation was not owned or controlled by its designated joint liquidator. Advisers should not assume that designation of an office-holder taints the insolvent company; the regulation 7 analysis must be done on the facts [34], [95].
2. A regulator's determination can resolve status where the court will not. The court had declined at convening to decide MeSoFa's sanctions status ahead of sanction. OFSI's determination settled it, and the Scheme Company accepted it the same day [95].
3. A change in sanctions status can widen the franchise. Once the UK ground for exclusion fell away, MeSoFa was admitted to vote. The court approved this retrospectively as the opposite of the disenfranchisement seen in Nostrum and VEON, noting it removed any premise that a creditor barred from voting could not be fairly represented. Approval should ordinarily be sought in advance [53(4)].
4. UK and US positions can diverge. A creditor may be free of the UK asset freeze yet remain US-sanctioned. A creditor's own OFAC licence covers the creditor, not the scheme company, obligors, agents, trustee or new lenders, who act under their own licence [98].
5. Holding period trusts recognise, rather than enforce, foreign sanctions. This is the first English judgment to analyse substantively whether a trust required by an OFAC licence engages the exclusionary rule in Dicey, Morris & Collins, Rule 20. The judge addressed it from first principles, partly because MeSoFa had questioned the trust's propriety and validity, and held the rule was not engaged [105]–[108].
6. The trust preserves the sanctioned creditor's economic rights. The court held the trust was a necessary condition of the OFAC licence, but confirmed important protections. MeSoFa receives the same entitlements, on the same day, as every other creditor, under a fixed trust of vested interests. The holding period was lengthened in its favour so property is not lost through time, and any later transfer to an alternative transferee is a realisation, not a forfeiture [109]–[111]. MeSoFa can take its entitlements directly once it obtains its own authorisation [99]. The court also found no sign that the scheme had been promoted to take advantage of MeSoFa's position [88].
Counsel
Christopher Snell acted for MeSoFa, led by Nicholas Yeo KC, with written submissions considered by the court at the sanction stage. Adam Al-Attar KC of South Square appeared for the Scheme Company, instructed by Latham & Watkins.
Thirty-Three Chambers thanks Gherson LLP for the instruction in this matter.
The full judgment is available on BAILII.
