ALL Scheme Ltd, Re (Companies Act 2006)

At a scheme convening hearing, the court does not determine the merits of the proposed scheme. It considers jurisdiction, whether the proposed class or classes can fairly ascertain creditors’ wishes, and whether any obvious roadblock would make later sanction futile.

The starting point is a single class. Creditors should be divided only where their rights are so dissimilar that consultation in a common interest is impossible. The comparison concerns their existing rights, or those in a realistic alternative, with the rights under the scheme. Commercial or personal interests do not determine class composition. Adequate notice, comprehensible information, workable meeting arrangements and practical voting valuations are required. A release of co-obligors is permissible where necessary to make the rearrangement effective.

ALL Scheme Ltd, a newly incorporated company in the Amigo Group, applied to convene a single meeting of creditors in relation to a proposed scheme compromising redress claims against Amigo Loans Ltd and related liabilities. The scheme offered a fund and claims-adjudication process in circumstances where an administration was expected to produce no distribution for unsecured creditors.

The Financial Conduct Authority did not support the scheme, raising concerns about recovery levels, automated claims assessment and the proposed bar date. The central issues were whether the creditors formed one class, whether the arrangements would adequately ascertain their views, and whether any obvious roadblock prevented a meaningful sanction hearing.

1. Outcome. A single meeting of scheme creditors was convened. The court was not required at this stage to assess the scheme’s merits, fairness or ultimate sanction.
2. Class composition. The governing principles derived from Sovereign Life v Dodd [1892] 2 QB 573 supported a single class. The relevant question was whether creditors’ rights were so dissimilar that it was impossible for them to consult together in a common interest. Rights were compared as they existed, or would exist in a realistic alternative insolvency, with the rights under the scheme. Different commercial or personal interests were insufficient. Differences concerning set-off, securitised loans, guarantees, refinancing, IVAs, missing data and limitation did not create fundamental dissimilarities.
3. Information and voting. Notice and the proposed timetable were adequate in the circumstances. The Practice Statement Letter and supporting materials conveyed sufficient information, although their ultimate sufficiency remained for the sanction hearing. Webcast, telephone and online voting arrangements were acceptable subject to later scrutiny. For valuation, assuming loans and guarantees had been mis-sold and estimating interest and costs less relevant balances was a practical and reasonable method for voting purposes, not a determination of scheme claims.
4. Roadblocks. The use of an SPV scheme vehicle did not raise a jurisdictional obstacle at the convening stage. The court preferred the analysis in Re Gategroup Guarantee Limited [2021] EWHC 304 (Ch). A release of co-obligors was permissible where necessary to prevent a ricochet contribution claim, following and adopting Re Lecta Paper UK Limited [2020] EWHC 382 (Ch) at [21]. The FCA’s opposition did not make the meeting pointless.