Power of Court to approve compromise or arrangement without meeting of creditors
72M.—(1)  Despite section 210 of the Companies Act 1967 and section 71 and subject to this section, the Court may, on an application made by a company (in simplified debt restructuring), make an order approving a compromise or an arrangement between the company and its creditors or any class of those creditors.
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(2)  Subject to subsection (9), if the compromise or arrangement is approved by order of the Court under subsection (1), the compromise or arrangement is binding on the company (in simplified debt restructuring) and the creditors or class of creditors meant to be bound by the compromise or arrangement.
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(3)  The Court must not approve a compromise or an arrangement under subsection (1) unless —
(a)the company (in simplified debt restructuring) has provided each creditor meant to be bound by the compromise or arrangement with a statement that —
(i)explains the effect of the compromise or arrangement and, in particular, states —
(A)any material interests of the directors of the company (whether as directors or as members, creditors or holders of units of shares of the company or otherwise); and
(B)the effect that the compromise or arrangement has on those interests, insofar as that effect is different from the effect that the compromise or arrangement has on the like interests of other persons; and
(ii)contains the following information:
(A)information concerning the property, assets, business activities, financial condition and prospects of the company;
(B)information on the manner in which the terms of the compromise or arrangement will, if it takes effect, affect the rights of the creditor;
(C)any other information as is necessary to enable the creditor to make an informed decision whether to agree to the compromise or arrangement;
(b)the company (in simplified debt restructuring) has informed each creditor meant to be bound by the compromise or arrangement of the date fixed for the determination of the application under subsection (1), and sent to each such creditor, at least 14 days before that date —
(i)a notice of the application, including a statement that a creditor who objects to the approval of the compromise or arrangement must file the creditor’s objection in court at least 7 days before the date fixed for the determination of the application; and
(ii)a copy of the application;
(c)the company (in simplified debt restructuring) has published in the Gazette and on the designated website, at least 14 days before the date fixed for the determination of the application under subsection (1) —
(i)a notice of the application; and
(ii)a statement that a creditor who objects to the approval of the compromise or arrangement must file the creditor’s objection in court at least 7 days before the date fixed for the determination of the application; and
(d)the Court is satisfied that had a meeting of the creditors or class of creditors been summoned, a majority of at least two‑thirds in value of the creditors or class of creditors, present and voting either in person or by proxy at the meeting or any adjourned meeting, would have voted in favour of the compromise or arrangement (called in this section the threshold requirement).
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(4)  In determining whether the threshold requirement is met, the Court must —
(a)disregard any agreement or disagreement to the compromise or arrangement of any creditor who is a related party of the company (in simplified debt restructuring); and
(b)regard —
(i)all secured creditors as forming one class;
(ii)all unsecured creditors whose debts would, in the event of the winding up of the company (in simplified debt restructuring), be paid in priority to all other unsecured debts under section 203, as forming another class; and
(iii)all other unsecured creditors as forming yet another class.
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(5)  Despite subsection (4), in determining whether the threshold requirement is met in respect of a proposed compromise or arrangement for a company (in simplified debt restructuring), the Court may —
(a)take into account the agreement or disagreement to the proposed compromise or arrangement of any creditor who is a related party of the company; or
(b)substitute its classification of creditors of the company for the classification of creditors set out in subsection (4)(b),
if the circumstances so require and the result of doing so is fair and equitable to all the creditors meant to be bound by the proposed compromise or arrangement.
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(6)  The Court may, if it thinks fit, do either of the following without hearing oral arguments:
(a)grant its approval of a compromise or an arrangement, unless —
(i)a creditor meant to be bound by the compromise or arrangement has filed an objection mentioned in subsection (3)(b)(i); and
(ii)the Court is of the view that the application under subsection (1) cannot be properly determined without the attendance of parties;
(b)dismiss the application under subsection (1).
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(7)  To avoid doubt, subsection (6) does not affect the power of the Court to decide an application under subsection (1) after hearing oral arguments.
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(8)  The Court may grant its approval of a compromise or an arrangement subject to such alterations or conditions as the Court thinks just.
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(9)  Unless the Court orders otherwise, an order made under subsection (1) —
(a)has no effect until a copy of the order is lodged with the Registrar of Companies; and
(b)takes effect starting on the date of the lodgment.
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(10)  Where the terms of any compromise or arrangement approved under this section provide for any money or other consideration to be held by or on behalf of any party to the compromise or arrangement in trust for any person, the person holding the money or other consideration may after the expiration of 2 years, and must before the expiration of 10 years, starting on the date on which the money or other consideration was received by the person, transfer the money or other consideration to the Official Receiver.
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(11)  The Official Receiver must —
(a)deal with any moneys received under subsection (10) as if the moneys were paid to the Official Receiver under section 197; and
(b)sell or dispose of any other consideration received under subsection (10) in any manner as the Official Receiver thinks fit, and deal with the proceeds of the sale or disposal as if those proceeds were moneys paid to the Official Receiver under section 197.
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(12)  For the purposes of subsections (4)(a) and (5)(a), a creditor is a related party of a company (in simplified debt restructuring) if —
(a)the creditor is —
(i)a holding company, an ultimate holding company or a subsidiary, director or shareholder of the company (in simplified debt restructuring); or
(ii)a relative or spouse of a director or shareholder of the company (in simplified debt restructuring); or
(b)the creditor and the company (in simplified debt restructuring) are subsidiaries of the same holding company.
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(13)  For the purposes of subsection (12)(a)(ii), a creditor (A) is a relative of a director or shareholder of a company (in simplified debt restructuring) (B) if A is B’s brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal descendant, treating —
(a)any relationship of the half blood as a relationship of the whole blood and the stepchild or adopted child of any person as that person’s child; and
(b)an illegitimate child as the legitimate child of the child’s mother and reputed father.
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(14)  A reference in subsection (12)(a)(ii) to a spouse includes a former spouse and a reputed husband or wife.
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