ALL Scheme Ltd, Re (Companies Act 2006)

The court considered an application under Part 26 of the Companies Act 2006 and section 895 as to whether a single creditors' meeting should be convened in relation to a scheme of arrangement promoted by an SPV (ALL Scheme Ltd) for the benefit of unsecured creditors of Amigo Loans Ltd. The convening hearing addressed jurisdictional questions, class composition, the adequacy of notice and explanatory materials, the proposed meeting and voting arrangements, and potential roadblocks to a meaningful sanction hearing.

The judge applied the established test for class composition (derived from Sovereign Life v Dodd) and concluded that the various unsecured creditor groups (borrowers with different complaint types, guarantors, FOS fee claimant and others) did not possess rights so dissimilar as to require separate classes, noting in particular that set-off rights exist in both the scheme and the realistic alternative insolvency. The court reviewed procedural protections including an independent scheme assessor (RPC), a s.166 skilled person report, an automated then manual claims scrutiny process with independent adjudication and the FCA's position, and found no obvious roadblocks to convening a single meeting.

Background and parties:

• The applicant company, ALL Scheme Ltd, was incorporated to promote a scheme of arrangement for certain unsecured creditors of Amigo Loans Ltd (the Lender). Amigo's loan business had significant consumer redress exposure and cashflow pressures such that an insolvency (and administration) was a realistic prospect.
• The scheme fund was to be funded by an initial contribution, potential top-ups, and a profit-share from the Lender over four years. Claims would be subject to automated initial scrutiny, manual review and an independent adjudicator, with distributions paid pro rata and releases given in return.

Nature of the application:

• The application sought an order to convene a single creditors' meeting under the Companies Act 2006 to consider the proposed scheme.

Issues before the court:

• Whether the court has jurisdiction and whether creditors should be grouped into one or more classes.
• Whether notice and the explanatory materials were adequate for the constituency.
• Whether the proposed meeting arrangements (remote participation, voting via portal) and the voting valuation methodology were adequate to ascertain creditors' will.
• Whether use of an SPV, the proposed Deed of Release, the method of treating securitised loans and other procedural features constituted roadblocks making a sanction hearing pointless.
• The attitude of the FCA and the involvement of a s.166 skilled person.

Court's reasoning and findings:

• The court accepted that the scheme is a "compromise or arrangement" within section 895 and that the company is within Part 26. Applying the Sovereign Life v Dodd test the judge concluded that the rights of the various unsecured creditors were not so dissimilar as to make it impossible for them to consult together and therefore a single class meeting was appropriate.
• The court treated set-off rights as preserved under the scheme and observed that differences such as securitisation, refinancing or limitation arguments did not create fundamental dissimilarity of legal rights for class composition purposes; practical solutions (eg treating securitised loans as if retained and best endeavours obligations) were available.
• The Practice Statement Letter, explanatory materials and additional communications (videos, website, FAQs) were adequate for convening purposes, though the court suggested some further clarifications for the sanction stage.
• The proposed voting valuation approach (assuming claims admitted for voting as interest and costs less outstanding balances) was a sensible practical measure for the scale of the constituency.
• The SPV vehicle and the proposed Deed of Release were not jurisdictional impediments; the court relied on prior authorities and reasoning that co-obligor releases may be necessary to give practical effect to a scheme.
• The FCA did not support the scheme but reserved rights; the FCA's criticisms were matters for creditors and the sanction hearing rather than a bar to convening a meeting. A s.166 skilled person (Grant Thornton) had reviewed the claim scrutiny methodology and was content at present.

Disposition:

• The court ordered that a single creditors' meeting be convened; the convening hearing application was allowed. The adequacy and fairness of the scheme and the meeting outcome remain for scrutiny at the sanction stage.

The application to convene a single creditors' meeting was allowed and the court directed that a single meeting be convened in accordance with the draft order. The court held that (i) the scheme fell within Part 26 and section 895, (ii) the proposed single class was permissible because the rights of creditors were not so dissimilar as to require separate classes, and (iii) the notice, explanatory materials, voting arrangements and SPV structure did not present obvious roadblocks to a meaningful sanction hearing.