- Court declines to sanction scheme in light of ‘paucity of information’ (Re Sunbird Business Services)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring and Insolvency analysis: This was an application by Sunbird for the sanction by the court of a scheme of arrangement pursuant to Part 26 of the Companies Act 2006 (CA 2006). The scheme had been approved at the scheme meeting by the scheme creditors. Mr Justice Snowden nevertheless declined to sanction the scheme, citing among his many concerns: (i) Sunbird’s failure to provide the information required by the relevant legislation, (ii) to engage meaningfully with certain of its creditors, (iii) to provide detailed financial information regarding the company and its group, (iv) to provide an insolvency comparator, or (v) to explain to scheme creditors how the company’s valuation of its shares had been arrived at. Snowden J also expressed concerns regarding the now-commonplace use of lock-up agreements, both those where lock-up fees are paid, and those which result in unequal provision of information to different groups of creditors. Written by Lauren Kreamer, barrister at Radcliffe Chambers.
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