No rubber-stamp for Scheme

The Company proposed a Scheme of Arrangement to its creditors, which was approved by 87 per cent by value of the scheme creditors.

However, the court refused to approve the Scheme as:

  • The Company had failed to provide specific financial information to enable creditors to assess the prospects of recovery on insolvency.
  • There was no statement of the interests of directors.
  • The price for the debt to equity conversion and the proposed rights issue were unsupported by adequate financial information.
  • The consequences for creditors not subscribing for shares in the rights issue were inadequately and inaccurately explained.
  • Some creditors received information informally not available to all creditors.

The court concluded that the paucity of information provided by the Company to creditors that the directors considered irrelevant or an obstacle to their plans fell short of what was required for a fair process under Part 26.

In the matter of Sunbird Business Services Limited [2020] EWHC 2493(Ch)

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