Scottish Lion Insurance Company Ltd v Goodrich Corporation & Ors [2010] ScotCS CSIH_6 (29 January 2010)

Scottish Lion Insurance Company Ltd v Goodrich Corporation & Ors [2010] ScotCS CSIH_6 (29 January 2010)

The Lord Ordinary erred in holding that, for a solvent scheme of arrangement, the petitioner must show a 'problem' requiring a solution before the court can sanction the scheme in the face of creditor opposition. The statutory regime does not impose such a precondition; solvency is a factor to be weighed in the court's discretion, but not a bar. The case must proceed to a full hearing on the merits, considering all relevant evidence as to the scheme's fairness and advantages.

Citation
[2010] ScotCS CSIH_6
Parties
Petitioner and Reclaimer: The Scottish Lion Insurance Company Limited; Respondents: Goodrich Corporation and Others
Jurisdiction
Scotland
Judgment Date
29 January 2010
Procedural Posture
Petition for Sanction of Scheme of Arrangement Under Companies Act 2006 / Appeal (reclaiming Motion) From Dismissal at First Instance
Outcome
appeal allowed; first instance decision recalled; case remitted for further procedure
Legal Topics
Scheme of Arrangement, Creditor Democracy, Solvent Insurance Run Off, Court's Discretion in Sanctioning Schemes
Company Law Insurance Law Insolvency Law Scheme of Arrangement Creditor Democracy Solvent Insurance Run Off Court's Discretion in Sanctioning Schemes

Case Brief

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Parties

The Scottish Lion Insurance Company Limited

Petitioner and Reclaimer

Goodrich Corporation and Others

Respondents

Procedural Posture

Petition for Sanction of Scheme of Arrangement Under Companies Act 2006 / Appeal (reclaiming Motion) From Dismissal at First Instance

Legal Issues

  1. 1 Whether a solvent scheme of arrangement can be sanctioned in the face of creditor opposition without a 'problem' requiring a solution
  2. 2 Whether the court's discretion to sanction a scheme is fettered by the company's solvency
  3. 3 What test applies for sanctioning a scheme under s.899 Companies Act 2006

Ratio Decidendi

The Lord Ordinary erred in holding that, for a solvent scheme of arrangement, the petitioner must show a 'problem' requiring a solution before the court can sanction the scheme in the face of creditor opposition. The statutory regime does not impose such a precondition; solvency is a factor to be weighed in the court's discretion, but not a bar. The case must proceed to a full hearing on the merits, considering all relevant evidence as to the scheme's fairness and advantages.

Court Disposition

appeal allowed; first instance decision recalled; case remitted for further procedure

Orders

  • Recall the interlocutor of the Lord Ordinary dismissing the petition.
  • Remit the case to the Lord Ordinary to proceed as accords, including possible amendment of pleadings and further procedural steps before a hearing on the merits.