Halcrow Holdings Ltd, Re V

This was an application to sanction a scheme of arrangement under sections 895–899 of the Companies Act 2006 and to confirm a reduction of capital. The court exercised its unfettered discretion to sanction the scheme, holding that the statutory requirements had been complied with and that the accidental omission to send scheme documents to 306 shareholders could be disregarded under section 313 of the Companies Act 2006 and article 50 of the company’s articles. The court considered objections by pension scheme members that the takeover would prejudice the Halcrow Pension Scheme (the HPS) but concluded that those objections did not amount to a "blot" on the scheme in the legal sense, because there was no evidence of an intention to damage the scheme and the Guarantee and statutory obligations remained unaffected. A minor technical amendment (substituting a confirmation letter for USCo share certificates) was allowed.

Background and parties. Halcrow Holdings Limited sought court sanction for a scheme of arrangement to permit CH2M Hill Europe Limited (Bidco), controlled by CH2M Hill Companies Limited (USCo), to acquire the company. The scheme reclassified shares into A, B and C shares, with differing consideration mechanisms, and involved a capital reduction followed by allotment of new shares to Bidco. The Halcrow Group sponsors the Halcrow Pension Scheme (HPS), which had a significant deficit. The Halcrow Trust owned about 73.88% of Halcrow's shares. Dr Stephen Riciari-Columbi and another pensioner opposed the scheme on behalf of some pensioners.

Nature of the application. The company applied for (i) sanction of the scheme under sections 895–899 Companies Act 2006 and (ii) confirmation of a reduction of capital under sections 645–699 Companies Act 2006. Issues identified by the court were (a) an accidental omission in service of scheme documents to 306 shareholders (the "Accident Issue"), (b) pensioners' objections that the takeover would reduce the likelihood of recovery of the HPS deficit (the "Pension Issue"), and (c) a technical amendment to reflect that USCo does not issue share certificates (the "Amendment Issue").

Procedural posture and evidence. The court considered the minutes and voting at the court meeting, correspondence between the HPS trustees and the company/USCo, a redacted Ernst & Young covenant report and submissions from the company and Bidco. The trustees of the HPS, having taken actuarial, covenant and legal advice, decided not to oppose the scheme and explained that decision in a letter exhibited to evidence.

Issues framed and reasoning.

• Accidental omission: The court held there was an intention to serve all shareholders and that the failure to include certain shareholders in the printing matrix was an accidental omission. Section 313 and article 50 permitted disregarding such accidental failures; the company corrected the omission promptly and shareholders had time to object or vote.
• Pension objections/blot: The court reviewed authorities on the court's discretion to consider third‑party interests and the concept of a "blot". The pensioners’ concern was essentially cultural and predictive — that an overseas new parent might not feel bound to support the HPS. The court concluded there was no evidence of an intention by USCo to act malignly, no legally binding commitment was required to show detriment, and the Guarantee and statutory obligations remained. The trustees’ informed decision not to oppose the scheme and the Pensions Regulator’s lack of formal intervention weighed against refusing sanction.
• Amendment: The proposed amendment regarding the form of evidence of USCo share allotment was a minor technical change and was permitted.

Disposition. The court sanctioned the scheme and allowed the technical amendment. It did not finally confirm the reduction of capital on that day but addressed the statutory requirements and concluded that confirmation was supportable given proper provision for creditors and a discernible purpose for the reduction.

The court allowed the application to sanction the scheme of arrangement. It held that the accidental omission to send scheme documents to 306 shareholders was an accidental failure that could be disregarded under section 313 of the Companies Act 2006 and article 50 of the articles, and that the statutory requirements for sanction were satisfied. The court concluded that the pensioners' objections did not constitute a blot sufficient to refuse sanction because there was no evidence of an intention to damage the Halcrow Pension Scheme and the company’s obligations remained. A minor technical amendment (substituting a confirmation letter for USCo share certificates) was permitted. The reduction of capital was not confirmed that day but the court found that the statutory tests for confirmation would be met if pursued.