A notable judgement has been handed down in a recent examinership case. In the case involving Mac Interiors Limited, Mr Justice Michael Quinn ruled that the court had no jurisdiction to confirm the scheme of arrangement proposed by the Examiner.
The Judge said there had been a material irregularity in relation to the meetings at which the proposals were considered by the creditors of the Company. Lawyers at Matheson outline, in a note on the firm’s website, that the irregularity in question was creation of a class of creditors called “retained project creditors” who had claims that arose from projects that had not been terminated by the company or by the relevant creditors.
It was deemed that this class of “retained project creditors” had been improperly constituted. The Judge said that each class of creditor should be confined to persons “whose rights are not so dissimilar as to make it impossible to consult together with a view to their common interest”. As a result, the court decided, the “retained project creditors” should have been included in the class of unsecured creditors and it had no jurisdiction to confirm the proposals.
This judgement is significant in light of the new EU rules that requires a class of creditors in line to receive a dividend payment to back the scheme in order for court approval to be granted.
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