Bonds were subordinated in a winding up, and the company was in administration in which the administrators were proposing a scheme of arrangement. The judge was invited to apply the Tea Corporation principles in order to arrive at a conclusion that the bondholders would recover nothing and so would not have the right ot vote at a meeting to consider the relevant scheme. He drew attention to the fact that in the Tea Corporation case there was a finding that the assets would not suffice to meet the claims of shareholders and that there was a concession to that effect in Oceanic. He went on to say: ‘In the instant case the trustee does not concede that the proceeds of realisation of the company’s assets, whether in the course of administration or in the course of winding up, would inevitably be insufficient to meet the claims of scheme creditors . . .The evidence relied on by the trustee is also criticised on what appears to me to be cogent grounds in evidence filed on behalf of he administrators. The claim that there is even a remote possibility that sufficient might be realised in the course of administration or in winding up to meet the claims of the scheme creditors in full seems to me to verge on the fanciful. However, in the absence of any concession, I cannot on this application proceed on the assumption that there is no possibility that the claims of the scheme creditors will be met in full.’ However, despite his unwillingness to proceed on that assumption, the learned judge still came to the conclusion that the bondholders’ consent was not required, and at court concluded that the bondholders had no interest in the assets of the company: ‘It follows to the extent that the assets of the company are insufficient to meet the claims of scheme creditors, the holders of CULS have no interest in the assets of the company.’
Judges:
Vinelott J
Citations:
[1992] BCC 58, [1992] BCLC 322, [1992] 1 WLR 672
Jurisdiction:
England and Wales
Citing:
Cited – Re Tea Corporation CA 1904
A scheme was proposed in a liquidation and a meeting of, inter alia, ordinary shareholders was proposed, who were to be given shares in the new company in place of their shares in the old, so to that extent they were affected by the scheme. The . .
Cited by:
Cited – Mytravel Group Plc, Re Companies Act 1985 ChD 24-Nov-2004
The company sought approval of a proposed reconstruction under the section.
Held: Approval could not be given. To count as a reconstruction two principal qualities were required. The business carried on should be the same or similar, and those . .
Cited – In re Maxwell Communications plc ChD 1993
It was argued that the pari passu distribution of assets among unsecured creditors was a general rule of insolvency law from which it was not possible to contract out, even to one’s own disadvantage, particularly by analogy with cases on set-off in . .
Lists of cited by and citing cases may be incomplete.
Company, Insolvency
Updated: 16 May 2022; Ref: scu.220256