S425

Introduction Company Voluntary Arrangement Administration Order Members Voluntary Liquidation S425 Scheme of Arrangement Informal Agreement Print option

What is it?
Who can benefit from it?
The Procedure in Brief

What Is It?

A Companies Act 1985 procedure enabling a compromise or Arrangement between a company and its creditors, it’s members or any class of them, subject to ratification by the Court.

Who Can Benefit From It?

Generally an expensive procedure due to high level of Court involvement. Utilised more often than not in respect of larger public quoted companies.

The Procedure In Brief

The court on application of the company, any creditor orders the calling of meeting of creditors or members or clauses thereof as it so directs.

Notice of the relevant meetings must contain a statement explaining the effect of the compromise or arrangement being sought and a declaration of any material interests of the directors in the company and the effect of the proposed Arrangement on those interests so far as it is different than the effect on other creditors or members. It should also give note as to the effect on the rights of debenture holders.

The above notice must be advertised and where the advert does not include a statement regarding the effects on the directors and debenture holders, a location where the creditors and members may obtain the relevant details.

If a majority in number representing 75% in value of the creditors and members or classes thereof voting in person or by proxy agree to the Arrangement, upon receiving court sanction in the form of an Order being made and filed at the Registrar of Companies in Cardiff, the Arrangement becomes binding on all creditors or members or classes thereof. A copy of the Order should also be annexed to every copy of the company’s memorandum after the Order has been made.

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