The High Court sanctioned Millstream Recycling Ltd.’s creditors’ scheme of arrangement, subject to conditions requiring Staunton Foods Ltd.’s claim to be included for distribution and three creditors to give undertakings to the court. It also permanently stayed proceedings by scheme creditors against the company over claims arising from the defined contamination event.
The judgment, delivered by Miss Justice Laffoy on 8 November 2010, followed creditor meetings held on 1 July. Non-connected creditors approved the scheme by the statutory majority: 17 of 18 votes cast were in favour, representing 96% of the value of claims and 94% of those voting. Connected creditors approved it unanimously. The court found the statutory procedures had been followed and the votes were bona fide and voluntary.
Several parties challenged or qualified the proposed approval. Fulton and D.C. Cattle argued that Rosderra Irish Meats Group Ltd.’s claim should be excluded, or that the scheme should not be sanctioned. They questioned whether Rosderra qualified as a scheme creditor and argued that the claims process was unfair. Vion Food Group Ltd. also contended that the scheme lacked clarity about eligibility and the claims process. The judge found no basis to conclude that the scheme or its claims evaluation process was unfair or inequitable. She noted that the evidence did not establish that the expert had acted improperly in admitting Rosderra’s claim, and declined to disturb the creditors’ decision.
Staunton had learned of the scheme after the 12 February 2010 claims deadline and its claim was not accepted. The court had previously refused Staunton’s application to intervene before the creditor meetings, while leaving open the possibility of raising the issue at the sanction hearing. For this hearing, the expert provisionally assessed Staunton’s claim at €329,868, subject to further information; the estimated scheme dividend was about €26,000. The judge held that the claim should be included for distribution as if submitted by the deadline, describing this limited extension as a pragmatic and fair response with a relatively minor effect on other creditors.
The court also addressed possible double compensation. Rosderra and two connected creditors had given undertakings concerning any further compensation they might receive for the same losses. The judge found Rosderra’s undertaking insufficiently transparent about calculation and information duties, and required all three to give undertakings to the court in specified terms. The order sanctioned the scheme subject to those undertakings and Staunton’s inclusion, and permanently stayed scheme creditors’ proceedings against Millstream concerning the contamination event. The company was given liberty to apply to the court over issues arising from the undertakings.