Schemes of Arrangement and their interface with the law of trusts judicially considered
The Times Newspaper has reported the decision of the Court of Appeal in: In re Lehman Brothers International (Europe) (in Administration) (No 2), a case which was heard before Lord Neuberger of Abbotsbury, Master of the Rolls, Lord Justice Longmore and Lord Justice Patten. Judgment was delivered on November 6, 2009. The Times report notes that:
"A scheme of arrangement under Part 26 of the Companies Act 2006 required the arrangement to be made between the company and its creditors. Former clients of the company with proprietary interests held by the company in trust were not creditors, with the result that the court had no jurisdiction to sanction a scheme of arrangement which included those proprietary interests.
The Court of Appeal so held, dismissing an appeal by the administrators of Lehman Brothers International (Europe) against the decision of Mr Justice Blackburne ( EWHC 2141 (Ch)) that the court had no jurisdiction to sanction a scheme of arrangement proposed by the administrators between the company and former clients who had proprietary interests in the assets held by the company or on its behalf. The London Investment Banking Association opposed and GLG Partners LP supported the scheme..."
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...