Q&As

Can a scheme of arrangement be approved by a virtual meeting of creditors or shareholders during the coronavirus (COVID-19) crisis?

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Produced in partnership with Ryan Hocking of Gatehouse Chambers
Published on LexisPSL on 06/04/2020

The following Restructuring & Insolvency Q&A produced in partnership with Ryan Hocking of Gatehouse Chambers provides comprehensive and up to date legal information covering:

  • Can a scheme of arrangement be approved by a virtual meeting of creditors or shareholders during the coronavirus (COVID-19) crisis?

Can a scheme of arrangement be approved by a virtual meeting of creditors or shareholders during the coronavirus (COVID-19) crisis?

The procedure for a scheme of arrangement is set out in the Companies Act 2006 (CA 2006), and so is not subject to the amendments of the Insolvency Act 1986 which were made by the Small Business, Enterprise and Employment Act 2015 which made physical meetings the exception, rather than the rule. As such, the provisions of the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 which relate to decision making procedures by creditors or members of a company have no application in relation to schemes of arrangement.

CA 2006, Pt 26 sets out a three stage process for schemes of arrangement:

  1. first, there must be an application to the court to summon a meeting

  2. secondly, documentation must be provided to those entitled to attend the meeting and the meeting itself must be held

  3. thirdly, an application must be made to the court to sanction the scheme (with the scheme taking effect when the court’s sanction is given)

There are no specific requirements in relation to the form or procedure for meetings in CA 2006, Pt 26, and the general rule of meetings applies. Unlike the regime under IR 2016, SI 2016/1024, there are no detailed provisions setting out the appropriate procedure for virtual

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