OIC Run-Off Limited & Ors, Re

The court granted permission under Part 26 of the Companies Act 2006 for each company to convene a single meeting of the relevant class of creditors to consider cross-conditional schemes of arrangement. Key legal questions were whether notice of the convening hearing was adequate, whether there was any jurisdictional roadblock under s.896(1) of the Companies Act 2006, and whether the class of creditors was properly constituted. The judge concluded that notice was adequate, there was no obvious jurisdictional impediment, and the Final Scheme Creditors formed a single class because their rights were not so dissimilar as to prevent them consulting together. The court made directions for remote meetings (to be held on 24 April 2025), set out the proposed voting and valuation process, and authorised an order requiring applications to inspect the court file to be made on notice because of commercially sensitive material.

Nature of the application: An application by OIC Run-Off Limited and The London and Overseas Insurance Company Limited for permission to convene single creditor meetings for each company to consider two cross-conditional schemes of arrangement under Part 26 of the Companies Act 2006.

Background and parties:

• The Companies are long-standing insurance companies that ceased underwriting in 1992 and entered run-off; their affairs are administered by scheme administrators from PwC.
• There have been prior sanctioned schemes (1997 and the Amending Schemes of 2016). Qualifying ILU policyholders (those with parent company guarantees) retain special status and some could opt out of the 2016 Amending Schemes.
• The Final Schemes concern a small subset of opt-out Qualifying ILU policyholders (Final Scheme Creditors) with prospective liabilities that would fall to be notified after 31 December 2035 and therefore would not be covered by NNOFIC funding under the CPLA.

Relief sought: Permission to summon and hold meetings of the Final Scheme Creditors to consider and, if approved, permit subsequent sanction hearings for two cross-conditional schemes that would crystallise certain prospective liabilities and provide a $2 million fund (comprising expected residual company assets and contributions from NNOFIC) to be shared equally by Final Scheme Creditors who satisfy an actuarial-certification condition.

Issues framed by the court:

• Whether adequate notice of the convening hearing and proposed meetings had been given to the Final Scheme Creditors;
• Whether there was any jurisdictional impediment to the Court sanctioning the schemes (s.896(1));
• Whether the Final Scheme Creditors formed a properly constituted single class for voting purposes;
• The appropriateness of the proposed directions for the summoning, timing and conduct of the meetings (including remote attendance) and the proposed voting/valuation procedure.

Court's reasoning and conclusions:

• Notice: The Practice Statement letter and subsequent notices were circulated and, taking into account the sophistication of creditors, prior consultation and practical steps taken by the Scheme Administrators, notice was adequate.
• Jurisdiction: Both companies are English companies and previously subject to sanctioned schemes; there was no obvious impediment to the Court exercising its discretion to sanction the schemes.
• Class composition: Final Scheme Creditors were sufficiently homogenous in rights and interests to form a single class for each scheme because the comparator position (the right to notify claims after 31 December 2035 and share residual assets) was common to them.
• Meetings and procedure: Remote meetings were appropriate given the US location of most creditors; the proposed timetable (meeting on 24 April 2025 and sanction hearing listed for 30 April 2025) and the actuarial certificate requirement for entitlement to share the $2 million pool were acceptable; voting values would follow the estimation methodology used under the Amending Schemes with disputes referred to a vote assessor.
• Other matters: The Final Schemes are part of a broader plan including a potential Early Final Dividend Offer for General Scheme Creditors; the Court authorised a requirement that inspection of the court file be by application on notice because of commercially sensitive material.

The application was allowed: the court ordered that single meetings of the Final Scheme Creditors be convened for each Final Scheme. The judge found adequate notice had been given, no jurisdictional obstacle to sanction existed under Part 26 of the Companies Act 2006 and the proposed creditor class was properly constituted. Directions were given for remote meetings on 24 April 2025, a voting/valuation procedure consistent with the Amending Schemes was approved and inspection of the court file was made subject to application on notice because of financial sensitivity.