Provident SPV Ltd, Re

At a scheme-convening hearing, the court should assess notice, jurisdiction, class composition, arrangements for ascertaining creditors’ wishes and any apparent legal or technical road block to later approval. The court should not determine the merits or fairness of the scheme at that stage, although an obvious obstacle to sanction may justify refusing to convene the meeting.

Creditors may remain in one class despite material differences if they retain sufficient community of interest to consult together. Differences caused by personal circumstances or insolvency consequences do not necessarily reflect differences in rights. A proposed scheme may be limited to a particular section of creditors, but its fairness remains for consideration at sanction.

Provident SPV Limited sought an order convening a single meeting of redress creditors affected by a proposed scheme concerning Provident Personal Credit Limited and Greenwood Personal Credit Limited. The scheme involved a contribution fund, claims assessment and pro rata distribution for customers with potential affordability and related redress claims.

The court considered whether the proposed meeting had been properly notified, whether jurisdiction existed, whether the creditors formed one class, whether the voting arrangements were satisfactory, and whether any apparent obstacle made later sanction impossible. The Financial Conduct Authority raised objections principally directed to the content and fairness of the scheme at the sanction stage.

1. Order convening meeting. The court ordered the convening of a single meeting of the scheme creditors.
2. Role at convening stage. Following Re Noble Group [2018] EWHC 2991, the court’s function was limited to examining notice, jurisdiction, class composition, arrangements for ascertaining creditors’ wishes and any apparent road block to approval. The merits of the scheme were not to be determined at this stage.
3. Jurisdiction. The Company was a company within section 895 of the Companies Act 2006. The arrangement involved sufficient give and take: the Company would provide a fund and obtain releases, while creditors would surrender their insolvency claims in return for scheme rights to adjudication and compensation. The special purpose vehicle and assumption of liability created the necessary creditor relationship.
4. Class composition. The court applied the community-of-interest principle in Sovereign Life Assurance v Dodd [1895] 2 Q.B 273. Creditors should be separated only where their rights were so dissimilar that consultation was impossible. Differences between borrowers and guarantors, current and former borrowers, and borrowers whose loans had been assigned did not require separate classes. Those differences concerned circumstances or outcomes rather than materially different scheme rights. The question whether assigned-loan arrangements were fair was reserved for sanction.
5. Voting and communications. The explanatory material, personalised communications, website material and proposed virtual meeting arrangements were adequate. The proposed automated methodology for estimating and weighting unliquidated claims provided a fair basis for voting.
6. Potential road block and fairness. The court accepted that limiting a scheme to a section of creditors was legally permissible, applying Sea Assets v Garuda [2001] EWCA Civ 1696, subject to fairness at sanction. It also noted, obiter, that a road block might extend beyond legal or technical defects to matters of public policy. The court warned that a scheme imposed unilaterally might raise broader fairness concerns, including whether an intelligent and honest class member could reasonably approve it. Those concerns did not prevent convening the meeting.

First-instance decision. The judgment itself does not state any prior appellate decision in the same proceedings.