Schemes of Arrangement considered: Re Bluebrook Ltd [2009] EWHC 2114 (Ch) (11 August 2009)

Mr Justice Mann, apparently an iphone user, has handed down a lengthy judgment in the case of Re Bluebrook Ltd [2009] EWHC 2114 (Ch) (11 August 2009). The case concerns a £300 million group company scheme of arrangement. There are a number of interesting comments in the case concerning the interests of creditors in a scheme of arrangement, e.g:

"A company is free to select the creditors with whom it wishes to enter into an arrangement and need not include creditors whose rights are not altered by the scheme. This appears from Sea Assets Ltd v Pereroan etc Garuda Indonesia [2001] EWCA Civ 1869 and In re British & Commonwealth Holdings plc [1992] 1 WLR 672"

"...it is not necessary for the company to consult any class of creditors (or contributories) who are not affected, either because their rights are untouched or because they have no economic interest in the company. This is apparent from In re Tea Corporation Ltd [1904] 1 Ch 12, where the Court of Appeal held that the dissent of ordinary shareholders would not stop a scheme being sanctioned, because although those shareholders had a technical interest as shareholders, they in fact had no economic interest in the company because the assets were insufficient to generate a return to them in the liquidation that was then on foot. As Vaughan Williams LJ said (at page 23):

"It would be very unfortunate if a different view had to be taken, for if there were ordinary shareholders who had really no interest in the company's assets, and a scheme had been approved by the creditors, and all those were really interested in the assets, the ordinary shareholders would be able to say that it should not be carried into effect unless some terms were made with them."

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