Under the scheme, an SPV was to be set up to take on these potential liabilities with the companies then being wound down. The SPV was to be funded with £50 million from the group company parent with the fund being used to meet claims which were to be submitted under a bar date mechanism with a six month cut-off date. Trading and other creditors were not included in the scheme.
The court noted that the scheme bore similarities to the scheme proposed in All Scheme Limited wherein the court had refused sanction. The court in the present case, however, distinguished the two schemes on the ground that in All Scheme, there was no intention to wind down the businesses following the scheme, such that the scheme creditors were being forced to take a haircut, but not the shareholders while in the present case, the businesses were being wound down and if there were any surplus, this was to be distributed to the scheme creditors.
Also seemingly of significance was the fact that there was room for alternative restructurings in All Scheme, whereas in the present case, the alternative was a formal insolvency procedure in which the scheme creditors would get nothing.
The FCA did not appear at the sanction hearing, but a letter from them was put in evidence which was expressed to be “not a letter of non-objection” and which raised a number of issues in relation to the scheme. The court considered these points but held that they did not result in there being a blot on the scheme. The court therefore sanctioned the scheme.
In re Provident SPV Limited  EWHC 2217 (Ch)