Schemes of arrangement- court sanctions when conditions outstanding

Re Lombard Medical Technologies Plc [2014] EWHC 2457 (Ch)

The Facts

Lombard Medical Technologies (LMT), a medical device company, proposed a scheme of arrangement where the company’s business would be redomiciled to the Canary Islands. Funds were to be raised by issuing shares to new investors, but it was a condition of the scheme arrangement that the fundraising would not be completed and the new investors would not be obliged to commit themselves until the scheme of arrangement was approved by the court. It was also essential that the scheme would not be completed until there was at least a practical certainty that the fundraising would be completed.

The Decision

The court sanctioned the agreement under their section 899 discretion despite the outstanding conditions. It was held that the general rule of practice, where the court required that all conditions had been satisfied before sanctioning, could be departed from in certain circumstances. The court found that this case involved one of those circumstances. There were good commercial reasons for the outstanding conditions as it was a practical certainty that the conditions would be satisfied within 24 hours of the scheme sanction hearing.