Lloyd's Maritime and Commercial Law Quarterly
A NEW BYWORD FOR CROSS-BORDER RESTRUCTURING: SCHEME OF ARRANGEMENT AS JUDGMENT
Re Cavell
Conventional wisdom has it that a scheme of arrangement under the Companies Act 1985, s 425 is complex, cumbersome and expensive, and hence rarely used.1
Nevertheless, of late schemes of arrangement seem to have gained currency on two fronts. First, complex financial restructurings tend to be achieved via a scheme.2
Secondly, apart from the long-established popularity of schemes as a means of finalizing the affairs of insolvent insurance companies,3
solvent insurance companies in run-off have increasingly resorted to solvent schemes of arrangement as a quicker exit strategy to finalize the run-off while they are still solvent.4
1. See Report of the Joint DTI/Treasury Review of Company Rescue and Business Reconstruction Mechanisms
(2000), para 43. In fact it is because of the formality and complexity of a scheme of arrangement that the company voluntary arrangement (“CVA”) regime was introduced under Part I of the Insolvency Act 1986. See Report of the Insolvency Law Review Committee, Insolvency Law and Practice
(Cmnd 8558, 1982), ch 7. However, in the case of a complex restructuring, a CVA is no less complex than a scheme of arrangement; see, eg, the recent CVA of the TXU group.
2. Recent high profile cases include Re Marconi
[2003] EWHC 1083 (Ch); Re Drax Holdings
[2003] EWHC 2743 (Ch); [2004] 1 WLR 1049; Re Telewest Communications
[2004] EWHC 1466 (Ch); Re Mytravel Group
[2004] EWCA Civ 1734.
3. Eg, Re Pan Atlantic Ins Co
[2003] EWHC 1696 (Ch); [2003] 2 BCLC 678.
4. Eg, Re Osiris Insurance
[1999] 1 BCLC 182.
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