Scottish Lion - scheme of arrangement under Companies Act 2006
16 February 2010
The First Division overturned the first instance decision to dismiss the petition of The Scottish Lion Insurance Company Limited for sanction of a scheme of arrangement under section 899 of the Companies Act 2006.
Their Lordships confirmed that solvent schemes of arrangement should be treated in principle in the same manner as insolvent schemes of arrangement. In their Lordships' view, the Lord Ordinary erred in concluding that, this being a solvent scheme, the petitioners could only succeed if they could prove that there was 'a problem requiring a solution' or that creditor democracy should apply only where 'failure to agree would ruin it for all'. Further, in their Lordships' view, loss of a policyholder's contractual rights is not a reason in itself for refusal to sanction a solvent scheme of arrangement.
Axiom's Almira Delibegovic-Broome appeared as junior counsel for Scottish Lion and James McNeill QC as senior counsel for the opposing creditors.
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