Macfarlanes advises Castle Trust on innovative form of scheme of arrangement
Macfarlanes has advised Castle Trust on an innovative form of scheme of arrangement which will convert bonds sold to more than 20,000 retail investors into deposit balances in new bank accounts upon completion of Castle Trust’s ongoing application to become a bank. This is the first time a company has used a scheme for this purpose.
As is required with a scheme of arrangement, the High Court was asked (at a hearing held over Skype) to make an order to convene meetings of the relevant companies' creditors (the investors) to allow them to vote on the schemes. Due to the current lockdown restrictions in the UK during the Covid-19 pandemic, it was not possible for the companies’ investors physically to attend the scheme meetings. As a result, the companies asked the court to make an order allowing them to conduct the meetings and votes by telephone, with investors who had access to the internet additionally able to view the chairman via a linked webcast.
The support of the court for the use of technology in substitution for more traditional approaches to creditors’ meetings was critical to the success of the scheme, is a great reflection of the ability of the English court system to adapt to current conditions and shows that the English system remains open both for domestic businesses and for international businesses which need to come here to restructure.
A sanctions hearing followed on 3 June, which scrutinised the conduct of these virtual creditors’ meetings. This confirmed that all was in order and that all attendees had successfully been able to participate.
The Macfarlanes team for this matter was led day-to-day by Simon Beale with support from restructuring partner Jat Bains and finance partner Richard Fletcher, together with solicitors Amy Walker and Tim Bromley-White. Financial services regulation advice was provided by partner Paul Ellison, with partner Greg Price and senior solicitor Laura Foley advising on tax matters.
Simon Beale comments: “We were really pleased to be able to assist Castle Trust on this novel use of a scheme of arrangement and in overcoming the obstacles posed by the interesting times that we currently face. Both the purpose of the schemes and the manner in which the meetings were conducted are firsts of their kind, and it was exciting to be a part of this”.