OIC Run-Off Limited & Ors, Re

At a scheme convening hearing, the court determines whether creditors have adequate notice, whether any obvious jurisdictional roadblock exists, and whether the proposed classes are properly constituted. It does not decide the scheme’s merits or fairness, which are matters for the sanction hearing.

Notice is fact-sensitive. Relevant considerations include the scheme’s complexity, the company’s financial position, creditor sophistication and prior consultation. A class should contain creditors whose rights are sufficiently similar to enable consultation in their common interest. Unnecessary proliferation of classes should be avoided. Remote meetings may be directed where appropriate, including where creditors are located overseas.

OIC Run-Off Limited and the London and Overseas Insurance Company Limited applied for permission to convene a single creditor meeting for each of two cross-conditional schemes under Companies Act 2006, Part 26.

The schemes concerned a small group of policyholders with parallel claims against both companies. They proposed crystallising prospective liabilities arising from claims notified after 31 December 2035 and making an enhanced fund available through contributions by Nationale-Nederlanden Overseas Finance and Investment Company.

The court considered adequacy of notice, jurisdiction, class composition, and the proposed arrangements for remote meetings. The central question was whether the meetings should be convened, leaving the merits and fairness of the schemes for any later sanction hearing.

1. Application granted. A single meeting of the relevant creditors was ordered for each Final Scheme.
2. At a convening hearing, the court considers whether creditors have received sufficient notice, whether there is an obvious jurisdictional impediment or other factor that would unquestionably prevent sanction, and whether the proposed class meetings are properly constituted. The court does not assess the merits or fairness of the scheme at this stage; those matters arise at the sanction hearing. This approach was stated by reference to Re Telewest Communications Plc.
3. The notice period was adequate. The assessment is fact-sensitive and depends on matters including the complexity of the scheme, the urgency of the company’s financial position, the sophistication of creditors and the extent of prior consultation. The extensive communications and follow-up steps taken here were sufficient, notwithstanding that some potential creditors could not be contacted. The court also noted the principle in Re Rhythmone plc that there is no absolute requirement that every class member be notified.
4. There was no obvious jurisdictional roadblock. The companies were English companies falling within section 859(2)(b) of the Companies Act 2006. The proposed arrangements involved the necessary element of give and take and constituted a compromise or arrangement within Part 26. This conclusion was consistent with the approach in Re Noble Group Ltd.
5. The creditors could vote in a single class for each scheme. Their rights in the comparator and under the proposed schemes were materially the same, and the enhanced fund available under the schemes provided a relevant common basis for consultation. The court applied the principle in Sovereign Life Assurance v Dodd, as summarised in Re Gategroup Guarantee Ltd, while avoiding unnecessary class proliferation.
6. Remote meetings were appropriate because most creditors were based in the United States, and the proposed timing gave them sufficient opportunity to review the explanatory material and establish voting values. The court accepted that remote meetings did not present an issue, applying Re Castle Trust Direct Plc. The court also approved an order requiring applications on notice before inspection of the court file, in light of the financially sensitive evidence.