Francis Beaufort Palmer.

Company precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) online

. (page 92 of 134)
Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 92 of 134)
Font size
QR-code for this ebook


the learned judge has no power to insist on this form or to disregard proxy
instruments otherwise framed.

As to voting under proxies signed in Australia and not in England at the time
of the meeting, see English, Scottish, and Australian Banh, (1893) 3 Ch. 385.
Majority. It is to be observed that the arrangement has to be agreed to by " a majority in

number representing three-fourths in value of such creditors or class of creditors
present in person or by proxy." Hence, unless the meeting unanimously agrees
to the scheme of an-angement, it is necessary to ascertain the number and value of
the creditors who vote in favour of and against the arrangement; ; for, supposing
that there are ten persons present, and that upon a show of hands nine vote in
favour of the scheme and one against it, this does not show the requisite statutory
majority ; since iion constat that the nine represent three-fourths in value of the
creditors present in person or by proxy. Moreover, those persons present in person
or by proxy who abstain altogether from voting must be taken into account, for
if they, together with those who vote against the scheme, make up more than one-
fourth in value, or more than one-half the number of members present in person or
by proxy, it follows that the statutory majority has not been obtained.

Those, however, who are not present in person or by proxy are not to be counted.
Phmnix Bessemer Co., 1 C. D. 251; Alabama, Keiv Orleans, S;c. Co., (1891) 1 Ch.
213.

The value in each case means the amount due to the particular creditor. In tlie
case, however, of a creditor whose claim is not liquidated, the value is the amount
for which he is entitled to prove.

The order for the meeting always requires the chairman to report the residt
thereof to the Court. The report will be framed on the lines of Form 788, supra,
and should show accurately the number of the class present, and the value thereof,
and how they vote. The rejDOrt is usually made an exhibit to an affidavit, and
verified thereby.

According to the old practice, it was usual to apply by petition, but occasionally
the application was made by simimons in chambers. Under the new practice,
the application is made by petition, but there is jurisdiction to make the order on
summons, as in the cases following: — Gaudet Fr'crcs, Malins, V.-C, 24th July,
1878, A. 1489; Northampton Coal Co., Malins, V.-C, 12th Sept. 1876, B. 1598;
Wcrcnstrill Colliery Co., Hall, V.-C, 2nd Dec. 1875, E. 1911; Vyruari Co.,
Chitty, J., 7th April, 1892.

The petition will set out the facts loading up to the scheme, and also the tonus
of the scheme, 'and will state the results of the meetings and pray for the sanction
Evidence. of the Court. It should be supported by a proper affidavit proving the necessary

facts, and it should bo borne in mind that it is not sufficient to make an
affidavit in general terms (Form 12), for the application is not interlocutory within
Ord. XXXVIII. r. 3. See cases sttpra, j). 30. The petition has, during the last



Value of
creditors.



Report of
chairman.



How sanction
obtained.



ARRANGEMENTS — FORMS. 703

twenty years, usually been by the liquidator, but of late it has become not
uncommon to join the company as a petitioner.

The Court has a discretion as to sanctioning an arrangement, even though agreed Court's
to by the statutory majority. The Court has to see "that the majority has been discretion,
acting hona fide,'''' and "that the minority has not been overridden by a majority
having interests clashing with those of the minority whom they seek to coerce.
Further than that, the Court has to look at the scheme and see whether it is one
as to which persons acting honestly, and viewing the scheme laid before them in
the interests of those whom they represent, take a \iew which can be reasonably
taken by business men." Per Lindley, L. J., Alabama, New Orleans Co., (1891) 1
Ch. 239 ; and see Engl'ish, Scottish and Australian Chartered Bank, (1893) 3 Ch. 385.
" I have no doubt at all that it woidd be improper for the Court to allow an
arrangement to be forced on any class of creditors, if the arrangement cannot
reasonably be supposed by sensible business people to be for the benefit of that
class as such, otherwise the sanction of the Court would be a sanction to what
would be a scheme of confiscation." Per Bowen, L. J., (1891) 1 Ch. 243.

The Court will not sanction an arrangement which has been carried by the votes
of creditors who are not acting bond fide in the interests of the class. Wedgicood Co.,
6 C. D. 627. But the mere fact that some of the creditors are shareholders does not
invalidate their votes. He Alabama Keiv Orleans Co., itbi supra. And in Re Buenos
Ayres Water Co., 66 L. T. 408, it was held that a special concession made by a third
party to voters was not to be regarded as a bribe.

As a rule, the Court will not sanction an arrangement which would prejudice a
creditor who, but for the scheme, would have been entitled to preferential rights
over the creditors who purport to bind him. R'lchards ^- Co., 11 C. D. 676.

It is more than doubtful whether, if a particular scheme is agreed to at a meeting Modifications
of creditors, the Court can sanction that scheme with modifications, unless °^ scheme,
there is some provision in the scheme providing for possible modifications. In
cases where there has been no such provision, and some modification has been
thought expedient, the Court has required the convention of a second meeting to
consider the scheme as modified ; but for some time past it has been usual to
insert in schemes a clause (orig-inated by the wi-iter) expressly empowering the
liquidator to assent to any modifications or conditions approved or imposed by the
Court, and this provision was apx^roved by Chitty, J., in Dominion of Canada, ^-c.
Co., 55 L. T. 347, and has frequently been acted on. In London Chartered Bank of
Australia, (1893) 3 Ch. 385, Vaughan Williams, J., modified the memorandum of
association of the proposed new company.

The powers conferred by the Act of 1870 are cumulative, and, in sanctioning a Exercise oi
scheme, the Court very commonly exercises powers which it has under the Act of Court's other
1862, e. <7.,when the scheme provides that the winding-up shall be stayed, the P°^°^^'
Court proceeds under sect. 89 of the Act of 1862 ; and when the arrangement pro-
vides for a sale of the undertaking, it may sometimes be that the Court exercises
the powers conferred on it by sect. 95 of the Act of 1862. So also, where there is
a debenture holder's action pending, and it is desired to stay that action, or to in
some way modify the proceedings therein, the application to the Court is usually
made not merely in the winding-up, but also iu the debenture holder's action, and
the Court then exercises its jurisdiction iu both proceedings by the same order. But
the application cannot be made in the action also unless the action has been
originally assigned or has been transferred to Vaughan AVilliams, J.

The Act expressly provides that an arrangement come to is to be binding Whomscheme
on all " such creditors or class of creditors, as the case may be, and also on the hinds,
liquidator and contributories of the said company," and obviously it is also binding
on the company itself.



704



ARRANGEMENTS — FORMS.



Foreign and

colonial

creditors.



Registration
"vrith view to
arrangement.



Debenture
trust deeds.

Meetings.



Those who are bound by the scheme cannot in any way object to the terms of it.
Their remedy is to appeal, and, whilst the order stands unappealed, it must be
treated as eifective. Nicholl v. Eberhardt, 61 L. T. 489 ; Re Emperor Life, 31
C. D. 78 ; Midland Coal, ^-c. Co., (1895) 1 Ch. 267. Leave to appeal is necessary
in some cases. Securities Insurance Sac, (1894) 2 Ch. 410.

Where an arrangement was approved by a meeting of policy holders and
sanctioned by the Court it was held that it did not touch a policy holder whose
claim had matured. Sovereign Life v. Bodd, (1892) 2 Q. B. 573. Where a meeting
of unsecured creditors was convened a person having a contingent claim was held
bound. Midland, S;c. Co., (1895) 1 Ch. 267.

How far are foreign and colonial creditors bound by an arrangement sanc-
tioned in the United Kingdom under the Act of 1870 ? The general rule is that
a discharge under the bankruptcy or analogous laws of any country from debts
or liabilities is a discharge in the Courts of such country from such debts or lia-
bilities wherever contracted. Armani v. Castrique, 13 M. & W. 443. Hence,
after an arrangement here providing that all the creditors shall accept paid-up
shares in satisfaction of their claims, a creditor suing here for a debt incurred
abroad would be met with the arrangement. But a discharge under an arrangement
here would not, in the case of a debt contracted or to be paid in a foreign country,
prevent the creditor from suing in such country {Smith v. Buchanan, 1 East, 6) even
though the company were domiciled here. Gihbs v. La Societe d-es Metaux, 25 Q. B. D.
399. Nevertheless a discharge under the Act would seem to bind creditors
suing in the colonies, on the ground that the Act is an imperial statute plainly
intended to operate throughout the British dominions. Ellis v. McHennj, L. R. 6
C. P. 228. For it is to be read (sect. 4), as part of the Act of 1862, which impresses
all the assets in a winding-up with a trust for all the creditors ; and it can scarcely be
supposed that Parliament intended the colonial creditors to scramble for the colonial
assets. The words are, it is submitted, sufficient, although not so emphatic as in
the Bankruptcy Acts, 1869 and 1883. Callender v. Colonial Sec., (1891) A. C. 460.
And accordingly an arrangement under the Act should be pleadable in a colony.
Edwards v. Ronald, 1 Knapp, P. C. 259.

It is not at all uncommon for a company to go into voluntaiy liquidation for the
express purpose of carrying out an arrangement with its creditors. Thus, a com-
pany may be carrying on a sound and improving business, and may be but little
indebted, except to debentui-e holders, say for 100,000/. These debentures may be
about all due, and it may be known that a considerable minority would object to
any renewal. This being so, it may be considered expedient to pass a resolution
for winding-up, and then to proceed under the Act to adopt a scheme for post-
poning the time for payment, or for converting the debentures into debenture stock,
and then to stay the winding-up. Further, there are cases in which a company
not registered under the Act of 1862 may find it expedient to register under that
Act, and then pass a resolution for winding-up, and then proceed, under the Act of
1870, to effect an arrangement with its creditors. By registering, the power to
wind up voluntarily and take advantage of the Act of 1870 arises. And where an
unregistered company is, under Part VIII. of the Act of 1862, ordered to be wound
up compulsorily, the Act of 1870 is thereby rendered available as regards such
company.

Where the scheme provides for the issue of debentures, or debentui'e stock, with
provisions in a trust deed or otherwise, enabling a majority to bind a minority of the
class at a meeting, Vaughan Williams, J., requires the deed to make the sanction
of the Court necessary. Land Morlf/ayc Hank of Florida, (18f;6) W. N. 48.

This is contrary to past practice as well of the learned judge as also of Lord
Justice Chitty and other judges of the Chancery Division.



ARRANGEMENTS — FORMS. / Oh

As to the reduction of the fees payable to the official receiver as liquidator or Reduction of
provisional liquidator in case of reconstructions or schemes of arrangement, see fees,
order of Lord Chancellor of Slst August, 1893, in Appendix B.



In tlie High Ct of Justice. (Cos "Winding-up.) Mr. Justice Vauglian Form 816.

Williams. In tlie matter of the Cos Acts, 18G2 to 1890, and in the ^; Z

' ' buinmons tor

matter of the Joint Stock Cos Ai-rangement Act, 1870, and in the meetings.

matter of the Coy, Limtd.

l_Fofmal parts. 1
that the applicant may bo directed to convene separate meetings
of the [state ivhat, e.g., (1) of the debenture holders, (2) of the un-
secured creditors, and (3) of the contributories of the above-named
coy] for the purpose of \^state purpose, e.g., considering and, if thought
fit, approving a scheme of arrangement proposed to be made between
such debenture holders and creditors and the coy], and that the appK-
cant may be directed to convene the same in manner following \state
hoio'l, or in such other manner as the Ct may direct, and that a chair-
man of the sd meetings may be appointed, and may be directed to
report the result thof to the Ct.

As to affidavit in support, see supra, p. 702.

Whether the winding-up is compulsory, under supei-vision, or voluntary, an
originating summons [Form 7ol] is required.



Upon the applicon of A. and B., the joint liqrs of the above-named Form 817.

coy, and upon hearing the solor for the aj^plicants, and upon reading Order for

the order to wind up, &:c., the afft of the sd A., filed the day of meetings and

, and the exhibit A. therein referred to (being the scheme of ^*^^"*'6r*^i»e-

^ ® ments.

reconstruction and arrangement linftr mentd), It is ordered that the

applicants do convene separate meetings of (1) the creditors, (2) the
debenture holders, and (3) the contributories of the above-named coy,

[to beheld at , on the day of , 189 — , at two o'clock,

three o'clock, and four o'clock in the afternoon resply,] for the purpose
of considering and, if thought fit, approving a scheme of reconstruc-
tion and arrangement to be made between such creditors and debenture
holders and the sd coy and its creditors, and it is ordered that at least
seven \jioiv generally ten or fourteen~\ days before the day appointed for
such meetings an advertisement convening the same, and stating that
a copy of the scheme can be seen at the office of the solors for the
aj)plicaut and the sd liqrs, be inserted once in the London Gazette and
once in each of the following newsj)apers. Times, Standard, Daihj
News, and Daily Telegraph; and, in addition, that \_at least seven days
(or, as may be, ten or fourteen) before the day appointed fur sack
P. z z



706



ARRANGEMENTS — FORMS.



meetings] circular letters to the same effect, together with a proper
form of proxy and a print of the sd scheme, be sent to each of the sd
creditors, debenture holders, and contributories resply whose addresses
are known to the sd applicants. And this Ct doth hereby appoint the sd
B., or failing him, N., the senior off recr, chairman of the sd several
meetings ; and that the sd chairman do report the result of the sd
meetings to the Ct.

The above order fixes the day and place and time for the meetings ; but this is
not usual.

Sometimes A. is appointed chairman, and, failing him, B.

Sometimes the order is that the liquidator be at liberty to call the meetings, but
that is not correct, as under this Act the Court is to " order that a meeting shall
be summoned." See supra.

For order when one liquidation only (in England), and many creditors abroad,
and for telegraphing proxies, see order of May, 1893, in Etifflish, Scottish, and
Australian Chartered Bank.



Form 818.

Meetings to
be convened

(1) by deben-
ture holders,

(2) by liqui-
dator.



Ui^on the applicon by originating summons, dated 9th Dec. 1895, of
the A. Corporation, Limtd, creditors and debenture holders of the
above-named coy, and upon hearing the solors for the applicants and
for the off recr and liqr of the above-named coy, and upon reading the
order to wind up dated, &c., and the afft of 0. filed, (S:c., and the exhibit
therein referred to (being the scheme of arrangement hnftr mentd), it
is ordered that the applicants do forthwith convene a meeting of the
debenture holders of the above-named coy, and that the sd off recr and
liqr do forthwith convene a separate meeting of the unsecured creditors
of the sd coy, such meetings to be held for the purpose of considering
and, if thought fit, approving (with or without modification) a scheme
of arrangement proposed to be made between the sd coy and its credi-
tors, such meetings to be held in London on Monday, the 23rd of Dec.
1895. And it is ordered that an advertisement convening the sd meet-
ings and stating that a copy of the scheme can be seen at the office of
the solors for the applicants and of the solors for the sd off recr and
liqr be inserted in the London Gazette on the 17th of Dec. 1895, and in
each of the following newspapers, namely, The Times and The Morning
Advertiser, not later than Saturday, the 14th of Dec. 1895. And it is

ordered that in addition to the sd advertisements [at least days

before the day appointed for such meetings] a circular letter convening
the sd meetings and inclosing a print of the sd scheme of arrangement
and a proper form of proxy bo sent to each of the sd debenture holders
and unsecured creditors of the sd coy, whose addresses are resply
known to the applicants, as trustees for the debenture holders, and to
the sd off recr and liqr of the sd coy, and it is ordered that W. be
appointed chairman of the sd meeting of debenture holders, and that
C, assistant off recr, bo appointed chairman of the sd meeting of



AEEANGEMENTS — FOKMS. 707

secured crerlitors, and that the sd W. and the sd C. do resply report
the result of the sd meetings to the Ct. Ilounsloiv Brexoery Co., Hood,
Eeg., 12th Dec. 1895.

See another form, Santa Fe Co., Fonn 819, Gth edit, hereof.



Upon motion hy counsel for IE. the liqr of coy, and upon reading Form 819.
the afFa-mation of liqr, filed, &c., and the exhibits therein referred to, Qrder for
Order that the sd H. do convene separate meetings of the holders of meetings
the 100,000/. C p. c. debentures of the sd coy, and of the holders of ^eJtisement.
the 50,000/. 8 p. c. debentures of the sd coy for the purpose of con-
sidering, and, if thought fit, approving the scheme of arrangement
referred to in the said affirmation ; and let the said H. give at least
seven clear days' notice to each of the sd debenture holders by letter,
enclosing a copy of the sd scheme, and stating the time and place
of meeting, and the object for which the meeting is to be held, and
appoint H. chairman, and order him to report the result to judge. Re
Harris, S^-c. Co., Chitty, J., 19 June, 1888, B. 65.

In the above case it will be observed that there was no advertisement, the
addresses of all the debentiu-e holders being known. In like manner, there was no
advertisement in iJe London, ($-c. Co., Malins, V.-C, 10 July, 1879.



{Title, ^^c, see Form 816.) Form 820.

New Zealand Loan and Mercantile Agency Coy, Limtd. Advertise-

Notice is hby given, that by an order dated the 1 1th day of Jan., 1 894,

Mr. Eeg. has directed separate meetings of (1) the holders of the

consolidated 4 p. c. debenture stock of the coy secured by the trust
deed dated 4th Aug., 1892 ; (2) the remaining creditors of the sd coy
(other than the holders of the consolidated 4 p. c. debenture stock
of the 1892 issue, and their trustees, and other than the creditors
referred to in clause 9 of the scheme of arrangement hnfter mentd) ;
and (3) the contributories of the sd coy, for the ppse of considering
and, if thought fit, approving with or without modification a scheme
of arrangement, dated the 9th Jan., 1894, proposed between the coy
and the sd debentvire stock-holders and other creditors (other than as
afsd), to be held on Tuesday, the 20th day of Feb., 1894, at the Cannon
Street Hotel, Cannon Street, in the city of London, England, as regards
the meeting of the sd debenture stock-holders at 3.15 o'clock in the
afternoon, as regards the meeting of the sd creditors at 1 1 o'clock in
the forenoon, and as regards the meeting of the sd contributories at
2.15 o'clock in the afternoon, at which place and respective times all
the afsd debenture stock-holders, creditors, and contributories are
requested to attend. A copy of the sd scheme of arrangement can be

zz2



708 ARRANGEMENTS — FORMS.

seen at the office of the coy, Street, London, E.G., at any time

between the hours of 10 and 2, on any week day prior to the day of
the sd meetings. The sd debenture stock-holders, creditors, and con-
tributories may attend such meetings resply, and vote in person or by
proxy, provided that all proxies given by the sd debenture stock-
holders, creditors, and contributories resident in the United Kingdom,
or within the continent of Europe, are deposited with the Off Recr in
Cos Liquidation, 33, Carey Street, Lincoln's Inn, in the county of
London, not later than noon on Eriday, the 16th day of Eeb., 1894.
The Ct has appointed C. J. S. the off recr and prov liqr of the coy to
act as chairman of the sd meetings. The above-mentd scheme will be
subject to the subsequent approval of the Ct.

Dated the 20th day of January, 1894.

C. J. S., Ofi Eecr and Prov Liqr of the sd Coy.

Sometimes the advertisement contains some such words as the following : —
" Piu'suant to the said scheme, the three first directors of the new company are to
be selected at the said meeting- of the holders of debentures, and debenture holders
attending that meeting will have to produce their debentures." Dominion of Canada,
%c. Co., Ap. 1886.



Form 820a. (^*"^^^' ^'^•' *^^ ^'^''"^ ^^^•)

~[^^^^ The Globe Blocks Gold Mining Coy, Limtd,

Notice is hby given that Mr. Eegr Hood has by an order of 1 7th
Eeb. 1897, directed a meeting of the creditors and contributories of the
above-named coy to be convened for the purpose of considering, &c.,
and such meetings will be held at the offices of the Off Eecr, No. 33,
Carey Street, in the City of London, on the 18th day of March, 1897,
as to the meeting of creditors at 11.30 o'clock in the forenoon, and as
to the meeting of contributories at 2.30 o'clock in the afternoon, at
which times and place all the creditors and contributories of the
above-named coy are requested to attend. A copy of the sd scheme
can be seen by any creditor or contributory of the sd coy at the office
of B., the liqr of the sd coy, at 33, Carey Street, Lincoln's Inn, afsd.
The Ct has appointed the sd B., or failing him, "W., to act as chairman
of the sd meetings. Creditors or contributories unable to attend the
sd meetings can vote by proxy, a form of which can be obtained from
the liqr at the office afsd.

Dated tliis 5th day of March, 1897.

G. S. B., Senior Off Eecr and Liqr.

A. B. and C, No. Street, E.C.,

Solors for the applicants, upon whose applicon
the order above mentd was made.



ARRANGEMENTS FORMS. 709

{Titlr, S^'c.) rem 821.

Notice is liby given tliat Ly an order, dated the 2oth day of March, Another.
1896, made in the ahove matters, ]\[r. liogr Hood has directed separate
meetings (1) of the holders of the 730,000/. of G p.c. debentures of the
sd coy, and (2) of the contributories of the sd coy, for the purpose, &c.
The undersigned S. has been appointed to act as chairman of tlie sd
meetings. Every holder of debentures desiring to attend and vote
personally or by proxy at the meeting, must either produce his deben-
tures at the meeting, or he may deposit his debentures with the L. and
C. Banking Coy, Limtd, 21, Lombard Street, London, or any other
banker in Great Britain or Ireland, in exchange for a receipt for the
debentures stating the name and address of the depositor and the dis-
tinguishing numbers and face value of his debentures. Such receipt
must be dejiosited not later than Thursday, the 18th day of June, 1896,
at noon, at the L. and C. Banking Coy, Limtd, 21, Lombard Street,
London, E.C., when an attendance certificate and a voting talon will
be given, entitling the person depositing the debentures to attend and
vote in respect of such debentures at the sd meeting and any adjourn-
ment thof, and on any poll taken in consequence thof . After the trans-
action of the business at the meeting or any adjournment thof, the
receipt for the debentures deposited will be returned upon surrender
of the attendance certificate. Debenture holders and contributories
may vote either in person or by proxy. Porms for the appointment of
a proxy can be obtained at the office of the liqr, at, &c. or at the L.
and C. Banking Coy, Limtd. Debenture holders and contributories,
whether individuals or corporations, may appoint as their proxy any
debenture holder or contributory resply entitled to vote in his own

right. Proxies must be lodged with the Voluntary Liqr at E.G.,



Online LibraryFrancis Beaufort PalmerCompany precedents for use in relation to companies subject to the Companies acts, 1862 to 1890 ... (Volume 2) → online text (page 92 of 134)