schemes of arrangement

A restructuring plan completed earlier this year by Smile Telecoms notches up a number of firsts.

By James Chesterman and Tom Davies

African telecommunications provider Smile Telecoms Holding Limited, incorporated in Mauritius, successfully completed a restructuring plan (the Plan) under Part 26A of the UK Companies Act 2006 at the end of March 2021.

The Plan features a number of novel actions, including:

  • The first time a non-European company has used the Part 26A restructuring plan since its introduction in June 2020
  • The first time any company has layered in new money on a super-senior basis by way of a cross-class cram-down, a feature of the Part 26A restructuring plan not available under schemes of arrangement
  • The first time that sanction of a restructuring plan had to be adjourned due to the fact that a closing condition, which was subject to the discretion of a third party (namely a development finance institution acting through its representative, the Public Investment Corporation (PIC) of South Africa) rather than the court, remained unsatisfied at the initial time of sanction, which went to the core of the Plan’s effectiveness

This blog post takes a closer look at the implementation of the Plan.

By Simon Baskerville and Ed Richardson

Schemes of arrangement are a well-known and familiar tool for many within M&A. They are often used to implement acquisitions of public or widely held companies or restructurings of financial indebtedness, frequently as part of an acquisition through a debt-for-equity transaction. What is less well-known is how schemes of arrangement can potentially be used to manage a target company’s liabilities beyond financial indebtedness particularly in an increasingly litigious and regulated world.

What is a scheme of arrangement?

A long-standing feature of company law, a scheme of arrangement allows a company to impose a compromise or arrangement on its shareholders and/ or creditors, provided the scheme of arrangement is sanctioned by the court and approved by shareholders and/or creditors (depending on who is affected by the scheme) accounting for 75% in value and 50% in number.

Click for larger image.

By John Houghton and Marc Hecht

Latham lawyers, John Houghton and Marc Hecht, discuss insights gained from Latham’s work on major schemes of arrangement over the past few years, including Bibby Offshore, PrivatBank, DTEK, and Avangardco.

The Debtwire podcast covers many of the scheme considerations stakeholders face, with particular reference to DTEK’s hat-trick of schemes as well as the recent “loan to own” scheme in Bibby Offshore. The speakers also share their views on trends and potential challenges for