Schemes of arrangement and restructuring plans—class issues
Produced in partnership with Jonathan Akinluyi of Latham & Watkins and Riccardo Alonzi of Skadden
Schemes of arrangement and restructuring plans—class issues

The following Restructuring & Insolvency practice note produced in partnership with Jonathan Akinluyi of Latham & Watkins and Riccardo Alonzi of Skadden provides comprehensive and up to date legal information covering:

  • Schemes of arrangement and restructuring plans—class issues
  • Statute and practice guidance
  • Identifying a class
  • Comparators
  • Distinction between rights and interests
  • Minority oppression issue
  • Excluding creditors or shareholders from a particular class
  • Manipulation of classes

This Practice Note looks at the general principles involved in determining class issues. For a more detailed look at what may or may not fracture a class, see Checklist: Checklist of factors which may (and may not) fracture the class in a scheme of arrangement or restructuring plan.

Statute and practice guidance

Part 26 of the Companies Act 2006 (CA 2006), which governs the scheme of arrangement (scheme) procedure and CA 2006, Pt 26A, which governs the restructuring plan (plan) procedure, requires the applicant to apply first for an order of the court convening the relevant meeting(s) of creditors or members or any class(es) to approve the proposed scheme/plan. The court will not have jurisdiction to sanction a scheme/plan at the subsequent sanction hearing if the meetings of the relevant classes of creditors and/or members (as applicable) have not been properly constituted. It is, therefore, vitally important to identify and compose the appropriate classes with due care.

Judges have found that the caselaw relating to schemes is equally applicable to restructuring plans on many issues (see Re PizzaExpress (convening) and Re Virgin Atlantic), including class formation where in both procedures, the purpose of grouping creditors and members into class meetings is to enable the class to consult together and reach a collective conclusion on whether the company’s proposals for the variation of their rights ought to be

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