For a process enshrined in a few brief sections of the English Companies Acts, the meteoric rise in recent years of the scheme of arrangement to become one of the world’s most renowned debt restructuring tools is quite a story. A scheme allows a statutory majority of creditors (comprising a majority in number and 75% by value of those voting in each class) to vary the rights of the entire class and to “cram down” any dissentients, subject to the oversight of the court. In financial restructurings, schemes are typically used to make fundamental changes to the debt documents and/or capital structure that would otherwise contractually require the consent of a super-majority of all lenders (including extending maturity dates, writing off or capitalising debt and releasing security).
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