• Scheme extends debt maturities by three years
• Sponsors Cinven and Bain to inject CHF 200m
• No creditor objection expressed at meetings

An English High Court judge today (15 September) sanctioned Arxada’s debt restructuring scheme of arrangement.

Through the scheme, which is coupled with a CHF 200m contribution by the company’s sponsors, the Swiss specialty chemicals firm seeks to push out debt maturities by three years across its financial debt pile and improve liquidity without imposing any haircuts on the existing debts.

Mr Justice Rajah put his approval seal under Arxada’s sanction application in a hearing held in London this morning after being told by the company’s counsel that in creditor meetings held on 27 August the scheme secured unanimous support from those creditors who voted across the two creditor classes. A small fraction of the creditors present at the meetings chose to abstain, but no opposing votes were registered.

In broad terms, one class was made up of the company’s senior secured creditors (both loans and bonds), while the other was reserved for its more junior creditors (comprising a mix of fixed-rate and floating-rate notes).

The scheme was proposed by Herens UK Bidco Limited, an intermediate holding company within the group structure providing management services. The ultimate parent is Herens Topco S.à r.l., which is 42.21% owned by entities associated with Cinven, 42.21% by entities associated with Bain Capital, and 15.5% by other shareholders.

For more details on the approved scheme, see our coverage of the convening hearing and our Scheme Profile.

The group is not facing an immediate liquidity crisis. The company had posited that, even absent the transaction, the business would likely have sufficient liquidity until the maturity of its revolving credit facility in January 2028. Management, however, believes the group’s leverage is too high to allow a straightforward refinancing in current markets, making a distressed M&A process the most likely outcome in the absence of the present scheme.

Rajah J agreed that the proposed transaction provided “greater certainty” to the business.

Today, Arxada was represented by South Square’s Tom Smith KC and Stefanie Wilkins, instructed by Freshfields. An ad hoc group of the 2029 junior bondholders was represented by South Square’s Matthew Abraham, instructed by Gibson, Dunn & Crutcher.

No other parties were represented by counsel, and there was no indication of opposition from any other stakeholder, the court was told.

A rubber stamp 

Today’s sanction hearing was a smooth ride for Arxada. This was among other things due to the comfort the judge took from the unequivocal outcome of the creditor meetings held on 27 August.

As per the convening hearing judge’s instructions, the company’s creditors voted in two separate classes. In the senior secured class, 890 creditors were present at the meeting (by proxy). This represented 82.61% of the class by value. Of those, 865 creditors, with claims voted in favour of the scheme, while the remaining 25 creditors present abstained from voting. As such, 100% of the class was considered to have voted in favour of the scheme. Votes in favour among those present (whether voting or not) at the senior secured meeting was 97.2% by value.

At the senior noteholder meeting, 137 creditors were present (by proxy). This represented 96.24% of the class by value. Of those, 136 voted in favour of the scheme, while only one abstained. As such, here again the vote in favour was 100% of those who took part in the vote. Votes in favour at the senior noteholder meeting was 99.8% by value among those present (whether voting or not), while 0.2% by value abstained.

For the company, Smith KC argued that the high turnout and the overwhelming support level showed that the vote had been representative and that the majority had voted bona fide, i.e. in good faith.

The support enjoyed by the scheme at the meetings was hardly surprising, given that the proposed restructuring had already received substantial support as of the convening stage (over 85% in each class) through a Transaction Support Agreement. Creditors entering that agreement receive an early bird premium of 0.25% as well as a consent fee of the same amount.

At home and beyond

In his brief ex tempore judgment provided at the end of the hearing today, Rajah J found that there was no sign bad faith or coercion in the votes. The judge noted that the creditor classes had been properly constituted and the scheme had been “resoundingly” approved.

Arxada’s bond debt is governed by New York law, while it has significant assets or operations in other jurisdictions, including Switzerland and Luxembourg.

Rajah J noted that the company had provided independent expert opinions from legal experts in those jurisdictions as part of the evidence filed in support of the scheme.

He pointed out that the Luxembourg law expert had opined that the scheme was more likely than not to be recognised in Luxembourg (as per expert Professor André Prüm), while it was also likely to enjoy recognition in Switzerland (as per expert Dr Rodrigo Rodriguez) through qualifying as a “civil and commercial matter”. In the US, the scheme is expected to be given effect through a Chapter 15 proceeding, according to expert Benjamin Mintz.

The judge also noted that, in any event, holders of over 85% of the relevant debts in each creditor class have formally committed to support the scheme by signing up to the TSA, and as such they will not be able to challenge the scheme elsewhere.

In terms of the question of sufficient connection to these shores, the judge noted that the documents governing the senior secured debt (the SFA) and the intercreditor agreement (the ICA) are governed by English law. This, he found, was enough the clear the sufficient connection hurdle.

Danger ahead

Arxada is a global provider of microbial control solutions and specialty chemical services, with legal headquarters in Luxembourg and operational headquarters in Basel, Switzerland. The group employs approximately 3,100 people across 35 countries.

The group’s recent financial performance has been adversely affected by several external developments. According to the evidence referred to in the company’s skeleton, customer demand weakened after the COVID-19 pandemic, following a period when customers had maintained unusually high inventory levels. During 2025 and early 2026, demand remained subdued in several core end markets, particularly those linked to North American residential construction.

Geopolitical developments, including evolving trade policies and tensions in the Middle East, also negatively affected business performance.

Given perceived unlikelihood of a refinancing next year, the company characterises the proposed transaction as a “proactive restructuring” rather than a response to an imminent default. Management is concerned that, as maturities approach, uncertainty regarding the group’s ability to refinance could damage relationships with customers, suppliers and other stakeholders, reducing business value.

The debt

The scheme debt consists of senior secured debts as well as senior notes. Together these liabilities constitute four principal funded debt instruments, of which three fall under a Senior Facilities Agreement (SFA) and mature between January and July 2028.

The senior secured debt package comprises the facilities entered into under the SFA dated 14 May 2021. Borrowers include Herens Holdco S.à r.l., certain original borrowers and Arxada AG.

Outstanding facilities include:

All three term loan facilities were fully drawn when the relevant evidence was prepared.

Separately, Herens Holdco S.à r.l. issued US dollar-denominated 4.75% sustainability-linked senior secured notes due 15 May 2028. These SSNs are governed by New York law.

The SFA lenders and senior secured noteholders share a common first-ranking security package and rank pari passu among themselves under the intercreditor agreement.

The second major category of the company’s financial debt is structurally junior to the senior secured debt.

Herens Midco S.à r.l. issued euro-denominated 5.25% sustainability-linked senior notes due 15 May 2029. These are referred to as the Fixed Rate Senior Notes. The same group entity also issued US dollar floating-rate senior notes with the same maturity date.

The senior noteholders benefit from a separate security package and second-lien pledges. They rank behind the senior secured creditors under the intercreditor agreement and vote in a separate class of their own.

Arxada also has the following liabilities – which are not subject to the proposed scheme:

• Hedging liabilities under various derivative contracts;
• Lease liabilities of approximately CHF 30m as of 31 December 2025;
• Liabilities arising in the ordinary course of trade, as well as short-term incentive accruals and other minor accruals as part of the group’s ordinary business;
• An unsecured USD 30m Matterhorn facility, of which c. CHF 27m was drawn at 31 December 2025.
• Certain intercompany loans the repayment of which is subordinated to the repayment of the scheme debts.

The transaction

In a nutshell, under the scheme the maturity of all instruments will be extended by three years, with an additional payment-in-kind (PIK) margin and duration fee for the RCF, term loan B (TLB), and senior secured noteholders. In addition, the senior unsecured notes will have a PIK toggle option at the issuer’s discretion, instead of cash payments as per original terms.

For the senior facilities, the RCF’s maturity will be extended from 1 January 2028 to 1 April 2031. Term loan maturities will be pushed out from 1 July 2028 to 1 July 2031. Existing cash margins remain unchanged, while additional margin may accrue on a PIK basis. Early bird and consent fees (0.25% each) are capitalised into principal, and new covenants and lender protections are introduced.

For the SSNs, the existing 4.75% cash coupon remains unchanged, while additional margin may accrue on a PIK basis. The notes’ maturity will be extended from 15 May 2028 to 1 July 2031. Accrued interest and participation premiums are capitalised into principal.

As for the Fixed-Rate notes, their maturity will be extended from 15 May 2029 to 1 July 2032. Existing claims will be expanded to include accrued interest and participation premiums. The issuer obtains the ability to pay interest in PIK subject to conditions, while additional covenant protections are provided.

The Floating-Rate notes will be treated the same way, except that their coupon will be amended to include a fixed-rate component and a Term SOFR-linked component payable entirely in PIK form. Also, part of the coupon, referred to as the Accumulated Subordinated Coupon Amount, becomes subordinated to the remainder of the Topco liabilities.

A key element of the broader transaction is a CHF 200m (euro-equivalent) junior capital contribution from shareholders, including the sponsors, Cinven and Bain. This funding will be provided through Herens Topco S.à r.l. entity.

It will be implemented outside the scheme on a consensual basis and will be structured through issuance of Junior Contribution Notes. Its Proceeds will first be applied toward transaction expenses, with the remaining proceeds used to pay down drawings under the RCF debt.

A better outcome

An independent comparator report prepared by Ernst & Young LLP (EY) partners Simon Edel and Alay Patel showed that the most likely alternative to the scheme would be a distressed M&A process or a lender-led debt-for-equity restructuring implemented through the intercreditor agreement enforcement mechanics.

According to EY, recoveries are expected to be superior under the scheme transaction than under the comparator scenario. Expected recovery estimates are as follows:

Source: Arxada’s skeleton argument

EY also identified additional transaction benefits for the creditors, including additional margin opportunities, fees and premiums, covenant enhancements and increased certainty and stability.

The report also considered, and rejected as less likely, alternative scenarios involving a market refinancing, a different amend-and-extend transaction, or a non-distressed sale process.