Schemes of arrangement – court sanction when conditions outstanding (High Court)

In Re Lombard Medical Technologies Plc, the High Court held that it was appropriate to sanction a scheme of arrangement under section 899 of the Companies Act 2006 when outstanding conditions were yet to be satisfied. The court also held that it could direct that the order sanctioning the scheme should not be delivered to the Registrar until the outstanding conditions had been satisfied.

The court concluded that the general rule of court practice could be departed from if justified by the circumstances, and therefore the court would not require confirmation that all conditions had been satisfied or waived before sanctioning a scheme. Under the arrangements, the holding company’s fundraising for a NASDAQ listing was conditional on the sanctioning of the scheme and the scheme was not to become effective until the fundraising targets were met. The court found that there were good commercial reasons for such an arrangement as it was a practical certainty that the conditions would be satisfied within 24 hours of the scheme sanction hearing and if the conditions were not satisfied, the result would simply have been to preserve the status quo.