“the company has encountered, or is likely to encounter, financial difficulties that are affecting, or will or may affect, its ability to carry on business as a going concern”; and Threshold Condition B: “the purpose of the compromise or arrangement is to eliminate, reduce or prevent, or mitigate the effect of, any of the financial difficulties mentioned in [Threshold Condition A]” (3) Under Part 26A, by section 901C(3), “every creditor or member of the company whose rights are affected by the compromise or arrangement must be permitted to participate in a meeting ordered to be summoned under subsection (1)” but, by section 901C(4), that does not apply “in relation to a class of creditors or members of the company if, on an application under the subsection, the court is satisfied that none of the members of that class has a genuine economic interest in the company”
“the court is satisfied that, if the compromise or arrangement were to be sanctioned under section 901F, none of the members of the dissenting class would be any worse off than they would be in the event of the relevant alternative”. (The “relevant alternative” is defined as “…whatever the court considers would be most likely to occur in relation to the company if the compromise or arrangement were not sanctioned under section 901F”). Sanction Condition B: “the compromise or arrangement has been agreed by a number representing 75% in value of a class of creditors or (as the case may be) of members, present and voting either in person or by proxy at the meeting summoned under section 901C, who would receive a payment, or have a genuine economic interest in the company, in the event of the relevant alternative.”
“(a) any issues which may arise as to the constitution of meetings of members or creditors or which otherwise affect the conduct of those meetings; (b) any issues as to the existence of the court’s jurisdiction to sanction the scheme; (c) (in relation to a Part 26A scheme) any issues relevant to the conditions to be satisfied pursuant to section 901A of the 2006 Act and, if an application under section 901C(4) of the 2006 Act is to be made, any issues relevant to that application; and (d) any other issue not going to the merits or fairness of the scheme, but which might lead the court to refuse to sanction the scheme.”
“bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings.”
“Article 1(2)(b) of that Regulation excludes from its scope bankruptcy proceedings relating to the winding up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings. Since judicial arrangements are expressly excluded from the scope of that Regulation, it seems to me to be clear that the court should not, through arguments based on the hypothesis that a company may be liable to be wound up when solvent, permit that clear exclusion to be displaced by some sort of implied exclusion. I consider, therefore, that the sanction of a scheme under sections 425 and 426 of the Companies Act is expressly excluded from the scope of the Judgments Regulation.”
“As schemes of arrangements are not insolvency proceedings falling within the Insolvency Regulation and as it is generally accepted that the purpose of art.1(2)(b) is to enable the Judgments Regulation and the Insolvency Regulation to dovetail almost completely with each other (see the Schlosser Report cited by Briggs J. at [47]), it logically follows that the exclusion in art.1(2)(b) does not extend to a scheme of arrangement involving an insolvent company, at least unless the company is the subject of an insolvency proceeding falling within the Insolvency Regulation.”
“It is now well-established that an application for sanction of a Pt 26 scheme is a civil or commercial matter and the reasoning seems to me to apply with equal force”
“In respect of the national procedures contained in Annex A, this Regulation should apply without any further examination by the courts of another Member State as to whether the conditions set out in this Regulation are met. National insolvency procedures not listed in Annex A should not be covered by this Regulation.”
“Bankruptcy is also excluded from the scope of this Convention. A separate Convention is currently being drafted, since the peculiarities of this branch of the law require special rules. Article 1(2) excludes bankruptcy, proceedings relating to the winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings, i.e. those proceedings which, depending on the system of law involved, are based on the suspension of payments, the insolvency of the debtor or his inability to raise credit, and which involve the judicial authorities for the purpose either of compulsory and collective liquidation of the assets or simply of supervision. Thus the convention will cover proceedings arising from schemes of arrangement out of court, since the latter depend on the intention of the parties and are of a purely contractual nature… Proceedings relating to a bankruptcy are not necessarily excluded from the Convention. Only proceedings arising directly from the bankruptcy and hence falling within the scope of the Bankruptcy Convention of the European Economic Community are excluded from the scope of the Convention.”
“Pending the conclusion of the separate Convention covering bankruptcy, proceedings arising directly from bankruptcy will be governed by the legal rules currently in force, or by the conventions which already exist between certain Contracting States…”
“It is a normal (although not perhaps invariable) characteristic of insolvency proceedings that they are collective in nature, whereas it is a normal (but again not invariable) characteristic of civil and commercial proceedings within the scope of the Lugano Convention that they are brought by individuals or small groups, but not classes of creditor or stakeholder.”
“After an early but unsuccessful attempt to devise a harmonised insolvency law across all member states, independent from the different systems in existence in each, the framers of the Insolvency Regulation fastened upon the universal application of the lex concursus (the insolvency law of the home member state) as the only practicable means of achieving unity in crossborder insolvency.”
“This Regulation enables the main insolvency proceedings to be opened in the Member State where the debtor has the centre of its main interests. Those proceedings have universal scope and are aimed at encompassing all the debtor's assets. To protect the diversity of interests, this Regulation permits secondary insolvency proceedings to be opened to run in parallel with the main insolvency proceedings. Secondary insolvency proceedings may be opened in the Member State where the debtor has an establishment. The effects of secondary insolvency proceedings are limited to the assets located in that State. Mandatory rules of coordination with the main insolvency proceedings satisfy the need for unity in the Union.”
“for the purpose of rescue, adjustment of debt, reorganisation or liquidation: (a) a debtor is totally or partially divested of its assets and an insolvency practitioner is appointed; (b) the assets and affairs of a debtor are subject to control or supervision by a court; or (c) a temporary stay of individual enforcement proceedings is granted by a court or by operation of law, in order to allow for negotiations between the debtor and its creditors, provided that the proceedings in which the stay is granted provide for suitable measures to protect the general body of creditors and, where no agreement is reached, are preliminary to one of the proceedings referred to in point (a) or (b).”
“those which affect at least a significant part of the creditors to whom a debtor owes all or a substantial proportion of the debtor’s outstanding debts provided that the claims of those creditors who are not involved in such proceedings remain unaffected. Proceedings which involve only the financial creditors of a debtor should also be covered. Proceedings which do not include all the creditors of a debtor should be proceedings aimed at rescuing the debtor. Proceedings that lead to a definitive cessation of the debtor’s activities or the liquidation of the debtor’s assets should include all the debtor’s creditors.”
“Where the proceedings referred to in this paragraph may be commenced in situations where there is only a likelihood of insolvency, their purpose shall be to avoid the debtor's insolvency or the cessation of the debtor's business activities.”
“The scope of this Regulation should extend to proceedings which promote the rescue of economically viable but distressed businesses and which give a second chance to entrepreneurs. Itshould, in particular, extend to proceedings which provide forrestructuring of a debtor at a stage where there is only alikelihood of insolvency”
“This Regulation's scope should extend to proceedings which are triggered by situations in which the debtor faces nonfinancial difficulties, provided that such difficulties give rise to a real and serious threat to the debtor's actual or future ability to pay its debts as they fall due. The time frame relevant for the determination of such threat may extend to a period of several months or even longer in order to account for cases in which the debtor is faced with non-financial difficulties threatening the status of its business as a going concern and, in the medium term, its liquidity. This may be the case, for example, where the debtor has lost a contract which is of key importance to it.”
“The proposal extends the scope of the Regulation by revising the definition of insolvency proceedings to include hybrid and pre-insolvency proceedings…”
“This Regulation should apply to proceedings which are based on laws relating to insolvency. However, proceedings that are based on general company law not designed exclusively for insolvency situations should not be considered to be based on laws relating to insolvency.”
“In this context, the term ‘control’ should include situations where the court only intervenes on appeal by a creditor or other interested parties.”
“…need not be between the members and the company, but may be between the members and a third party purchaser, with the company’s only function being to register the transfer of shares and thereby terminate the existing members’ status as members.”
“In my judgment it is not a necessary element of an arrangement for the purposes of section 425 that it should alter the rights existing between the company and the creditors or members with whom it is made. No doubt in most cases it will alter those rights. But, provided that the context and content of the scheme are such as properly to constitute an arrangement between the company and the members or creditors concerned, it will fall within section 425. It is, as Nourse J observed, neither necessary nor desirable to attempt a definition of arrangement. The legislature has not done so. To insist on an alteration of rights, or a termination of rights as in the case of schemes to effect takeovers or mergers, is to impose a restriction which is neither warranted by the statutory language nor justified by the courts’ approach over many years to give the term its widest meaning. Nor is an arrangement necessarily outside the section, because its effect is to alter the rights of creditors against another party or because such alteration could be achieved by a scheme of arrangement with that other party. 54. These considerations all go to the meaning of arrangement in section 425 and hence the jurisdiction of the court under the section to sanction a scheme of arrangement. They do not fetter the discretion as to whether to sanction a scheme of arrangement. The looser the connection between the subjectmatter of the scheme and the relationship between the company and creditors concerned, the more substantial might be the objections on discretionary grounds to sanctioning the scheme.”
“…entirely logical to regard the court’s jurisdiction as extending to approving a scheme which varies or releases creditors’ claims against the company on terms which require them to bring into account and release rights of action against third parties designed to recover the same loss. The release of such third party claims is merely ancillary to the arrangement between the company and its own creditors.”
“…does not prevent the inclusion in the scheme of the release of contractual rights or rights of action against related third parties necessary in order to give effect to the arrangement proposed for the disposition of the debts and liabilities of the company to its own creditors.”
“The purpose of class meetings under Pt 26A is to enable those with a genuine economic interest in the company (as to which see s.901C(4) and 901G(5)) to reach a collective conclusion on whether the company’s proposals for the variation of their rights ought to be approved.”