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court had jurisdiction to sanction a scheme of arrangement in relation to an EEA
insurer provided it had sufficient connection with England and there was
nothing in European legislation that deprived it of that jurisdiction. The court
therefore had jurisdiction to sanction schemes of arrangement in relation to
companies incorporated in France and Ireland.
(2) The test for identifying a class of creditors was that the rights within it were
not so dissimilar as to make it impossible for them to consult together with a
view to their common interest, Re Hawk Insurance applied. When trying to
determine whether a single class existed an appropriate comparator must be
identified to establish what the creditor's rights would have been without the
scheme, British Aviation Insurance Co Ltd considered. In this case two separate
classes were determined, one for votes in relation to the creditor's unpaid
agreed claims, other claims not requiring estimation, unpaid additional claims
and outstanding claims and secondly in relation to the creditor's incurred but
not yet reported claims.
Sovereign v Dodd (1892) 2 QB 573. In this case a creditor, Mr Dodd, objected to
the sanction of a scheme as there had only been one meeting of creditors and
yet the scheme purported to bind what was in reality two classes of creditors.
The first class consisted of those people whose life policies had not yet matured,
and the second class was made up of those people whose policy had already
matured before the scheme of arrangement was proposed. It was held by the
Court of Appeal that there were indeed two classes of creditors and the scheme
was not sanctioned. In reaching this verdict, the Court of Appeal commented
that a class of creditors "must be confined to those persons whose rights are not
so dissimilar as to make it impossible for them to consult together with a view to
their common interest".
Telewest Communications Plc [2004] EWHC 924 (Ch). One of the points
considered was in relation to the strength of different creditors' rights.
Objecting creditors claimed that they were disadvantaged because their
contracts were in US dollars and the scheme imposed a provision that required
creditors' contractual currencies to be exchanged at a rate to prevail on a future
date. The judge held that the opposing bondholders did not have "embedded"
rights to a particular exchange rate which differed from that adopted by the
scheme. Instead the rights held were those arising from the imposition of
insolvency rules which take effect on the company's liquidation and were not
rights in the sense of rights being particular to the bondholders in question. The
judge also reinforced the principle established in Hawk such that the differences
in the rights of creditors may be material and certainly more than de minimis
without them leading to separate classes.
Transcontinental Underwriting Agency v Grand Union Insurance Co [1987] 2
Lloyd's Rep. 409. The court was asked to determine whether a broker who had
signed a retrocession agreement could himself sue on an agreement. It was
held that an agent, in this case the broker, who has signed a retrocession
agreement may sue on it himself and will hold the proceeds on behalf of his
principal.
Re Trix Ltd [1970] 1 WLR 1422. This case concerned a group of 12 associated
companies which had each entered into separate compromise agreements. The
agreement of all of the creditors had not been obtained to the agreements, so
an application was made to authorise the distributions sought despite this lack
of complete consent. The judge refused to grant the summons, and in so doing
stated that the correct way to deal with the situation in hand would have been a
single scheme of arrangement for all of the group companies. The judge was of
the view that it would have been entirely proper to have one scheme of
arrangement, commenced by the issue of a single originating summons.