What is a scheme or arrangement?

A scheme of arrangement (or a “scheme of reconstruction”) is a court-approved agreement between a company and its shareholders or creditors (e.g. lenders or debenture holders). It may affect mergers and amalgamations and may alter shareholder or creditor rights.

What is a scheme agreement?

Scheme Agreement means any agreement or contract entered into between the Parties, other than this Agreement, pursuant to which OAK (or, if applicable, any of its subsidiaries or affiliates) appoints the Intermediary as its intermediary for certain regulated activities related to the selling and/or effecting and …

What is a scheme of arrangement takeover?

Under a contractual takeover offer, the bidder makes a general offer to all target shareholders. A scheme of arrangement is a statutory mechanism which is an alternative to a contractual offer. It is a formal arrangement between the target company and its shareholders, which is governed by the Companies Act 2006.

What is a creditors scheme of arrangement?

A creditors’ scheme of arrangement is a process available to financially distressed companies seeking to restructure and avoid liquidation. The process involves a Court-approved compromise or arrangement to vary the terms of debts or claims between the company and a class (or classes) of creditors.

What is a scheme court hearing?

Scheme Court Hearing the hearing of the Court to sanction the Scheme pursuant to Section 899 of the Companies Act and any adjournment, postponement or reconvening thereof.

Is a scheme of arrangement a takeover?

A scheme can be used to effect the same outcome as a takeover bid by transferring all shares in the target to the bidder in return for consideration paid by the bidder to the target shareholders.

How does a scheme of arrangement work in bankruptcy?

A scheme of arrangement is an agreement, between a company in financial distress and its creditors, to assist the company in fulfilling its debt obligations. A scheme of arrangement works by restructuring the company’s debts and varying creditors’ rights.

What can a scheme of arrangement be used for?

A scheme of arrangement can be used as a mechanism to provide a broad range of restructuring solutions including debt for equity swaps, new money, re-setting of payment terms and the release of security or guarantees.

Do you need to be insolvent to have a scheme of arrangement?

There is no need for a company to be insolvent under English law for a scheme of arrangement to be available to it. The scheme of arrangement may, however, be used in conjunction with a formal insolvency procedure. Schemes of arrangement are flexible: the legislation does not prescribe their terms.

How are creditors classified in a scheme of arrangement?

During the meeting, the scheme creditors will cast their votes. As mentioned earlier, scheme creditors may be classified differently for voting purposes if they have differing interests.