T & N Ltd & Ors, Re Companies Act 1985 [2006] EWHC 1447 (Ch) (16 June 2006)

T & N Ltd & Ors, Re Companies Act 1985 [2006] EWHC 1447 (Ch) (16 June 2006)

The proposed schemes of arrangement are valid under section 425 of the Companies Act 1985 as arrangements between T&N and its EL Claimants, including those with rights transferred under the Third Parties (Rights Against Insurers) Act 1930. Section 3 of the 1930 Act does not render the scheme ineffective, as the relevant assignments and waivers are made by EL Claimants, not by the insured company. The scheme does not contravene the Employers' Liability (Compulsory Insurance) Act 1969. Issues of class composition and creditor status for contingent and future claims are to be determined in accordance with the principles set out in the judgment.

Citation
[2006] EWHC 1447 (Ch)
Parties
Applicant (administrators): T&N Limited and Others; Respondent (el Insurer): Royal & Sun Alliance Plc; Respondent (el Insurer): Lloyd's Syndicate 45/117; Respondent (contribution Claimant): Cape Insulation Limited; Interested Parties (el Claimants): Employees, former employees and dependants of former employees of T&N Limited and other scheme companies
Jurisdiction
England and Wales
Judgment Date
16 June 2006
Procedural Posture
Companies Court Application Under Companies Act 1985 Section 425 / Application for Leave to Convene Meetings of Creditors to Consider Schemes of Arrangement
Outcome
Leave granted to convene meetings of creditors to consider the proposed schemes of arrangement.
Legal Topics
Schemes of Arrangement, Creditors' Rights, Employers' Liability Insurance, Asbestos Claims, Third Parties (rights Against Insurers) Act 1930, Class Composition, Compulsory Insurance, Contingent Claims
Company Law Insolvency Law Insurance Law Schemes of Arrangement Creditors' Rights Employers' Liability Insurance Asbestos Claims Third Parties (rights Against Insurers) Act 1930 +3 more

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Parties

T&N Limited and Others

Applicant (administrators)

Royal & Sun Alliance Plc

Respondent (el Insurer)

Lloyd's Syndicate 45/117

Respondent (el Insurer)

Cape Insulation Limited

Respondent (contribution Claimant)

Employees, former employees and dependants of former employees of T&N Limited and other scheme companies

Interested Parties (el Claimants)

Procedural Posture

Companies Court Application Under Companies Act 1985 Section 425 / Application for Leave to Convene Meetings of Creditors to Consider Schemes of Arrangement

Legal Issues

  1. 1 Whether EL Claimants with transferred rights under the Third Parties (Rights Against Insurers) Act 1930 are creditors for section 425 purposes
  2. 2 Whether the scheme is a compromise or arrangement between the company and its creditors under section 425
  3. 3 Whether section 3 of the 1930 Act renders the scheme ineffective

Ratio Decidendi

The proposed schemes of arrangement are valid under section 425 of the Companies Act 1985 as arrangements between T&N and its EL Claimants, including those with rights transferred under the Third Parties (Rights Against Insurers) Act 1930. Section 3 of the 1930 Act does not render the scheme ineffective, as the relevant assignments and waivers are made by EL Claimants, not by the insured company. The scheme does not contravene the Employers' Liability (Compulsory Insurance) Act 1969. Issues of class composition and creditor status for contingent and future claims are to be determined in accordance with the principles set out in the judgment.

Court Disposition

Leave granted to convene meetings of creditors to consider the proposed schemes of arrangement.

Orders

  • Administrators granted leave to convene meetings of relevant classes of creditors as set out in the judgment.
  • Directions given for notification and conduct of meetings in accordance with the Practice Statement (Companies: Schemes of Arrangement) [2002] 1 WLR 1345.