Part 26 Scheme Sanctioned

The companies proposing the scheme were high interest rate lenders to individuals on low to moderate incomes. The companies proposed the scheme to deal with potential claims that the borrowers had for failure to comply with statutory requirements on lending.

Under the scheme, an SPV was to be set up to take on these potential liabilities with the companies then being wound down. The SPV was to be funded with £50 million from the group company parent with the fund being used to meet claims which were to be submitted under a bar date mechanism with a six month cut-off date. Trading and other creditors were not included in the scheme.

The court noted that the scheme bore similarities to the scheme proposed in All Scheme Limited wherein the court had refused sanction. The court in the present case, however, distinguished the two schemes on the ground that in All Scheme, there was no intention to wind down the businesses following the scheme, such that the scheme