In Re Boart Longyear Ltd (No 2) the Supreme Court of New South Wales recently approved two creditor schemes of arrangement on the application of Boart Longyear Limited. The schemes were considerably amended after the Court indicated at the first hearing that it was not likely to approve the original schemes on fairness grounds. Significantly, the Court ordered the parties to attend a mediation to resolve the fairness issues – something that has not been done before in a scheme of arrangement in either Australia or the United Kingdom.

The English Court of Appeal has recently decided that a corporation that held shares in a company remained a shareholder notwithstanding the shareholding company's dissolution.

BWE Estates Limited had two shareholders: an individual named David who held 75% of its shares and a company, Belvedere Limited, which held the remaining 25%. Although Belvedere was dissolved in 1996, it remained listed as a shareholder in BWE's share register.

In the English High Court, the joint administrators of four English companies within the former Lehman Brothers group sought directions from the Court in respect of a proposed settlement. The settlement would put to rest substantial inter-company claims including those at issue in the 'Waterfall III' proceedings.

In a second application heard on the same day, Hildyard J considered an application by the administrators of Lehman Brothers Europe Limited (LBEL) for directions that would enable a surplus to be distributed to the sole member of LBEL while LBEL remained in administration. The proposed scheme had material benefits for both shareholders and creditors. The administrators acknowledged that the orders sought were an indirect means of circumventing the Insolvency Act 1986 (UK), which does not expressly provide for directors to make distributions during an administration.

The Court of Appeal has recently dismissed an appeal from the High Court's judgment (discussed in our September 2016 update) setting aside a compromise under Part 14 of the Companies Act 1993 after finding that the challenging creditors, who had voted against the compromise, had been unfairly prejudiced by the decision to call only one meeting of creditors.

In Day v The Official Assignee as Liquidator of GN Networks Ltd (in Liq) [2016] NZHC 2400, the High Court rejected a claim that the funding arrangement at issue constituted maintenance or champerty.

Pension Protection Fund: valuation assumptions

The PPF has consulted on changing the assumptions used for section 143 valuations (used for schemes  in assessment periods) and section 179 valuations (used when setting a scheme's risk-based levy).   The PPF expects that the proposed changes would increase section 143 and section 179 liabilities by  just under 4% and would potentially lead to a small increase in the number of schemes transferring  to the PPF.

Pension Protection Fund: insolvency risk provider

HIGHLIGHTS

The credit crunch caused problems for businesses at the same time as the value of pension scheme assets plunged, adding ballooning defined benefit pension deficits to the woes of struggling companies.

Company insolvencies, and attempts at restructuring to avoid insolvencies, can have a significant impact on the pension schemes sponsored by those companies. The pensions issues can also act as a significant obstacle to restructuring.

Proposals issued October 2010

Confirmation given 31 January 2011

Policy statement issued May 2011

Draft guidance on the bespoke measurement of investment risk issued May 2011. Consultation ends on 24 June 2011

Consultation on the 2012/13 levy determination expected in autumn 2011

The PPF has confirmed its intention to implement a new levy framework from 2012/13. Key features of the framework confirmed in the policy statement include: