The High Court confirmed a scheme of arrangement for Cisti Gugan Barra Teoranta on 3 July 2008, after the intended investor waived conditions that had prevented the court from confirming it at an earlier hearing. The confirmation was subject to modifications, and the court directed the investor to complete its investment on 8 July.
The company petitioned for an examiner on 1 April 2008. Kieran Wallace was appointed examiner on 10 April, after an interim appointment on 3 April. His report and proposed scheme were presented to the court on 25 June. The examiner said the scheme had substantial support from creditors and shareholders and recommended confirmation, saying it would facilitate the company’s survival as a going concern.
At the 1 July confirmation hearing, the judge was satisfied that statutory requirements concerning acceptance and fairness were met. However, the investment remained conditional on requirements beyond court confirmation, including that there be no material adverse change in the company’s trading position. The investor was not present or represented at that hearing.
The judge said confirmation would reduce the company’s debts to the amounts set out in the scheme, while the investor would not itself be bound by the scheme. In the court’s view, it would be unfairly prejudicial to creditors to reduce the debts unless binding arrangements ensured the company received the money needed to pay them and provide working capital. The judge also referred to an earlier examinership, Mitek Holdings Ltd, where an investment allegedly agreed was not made after confirmation and the company later became insolvent.
The hearing was adjourned so the investor could be notified of the court’s concerns and given an opportunity to be heard. At the resumed hearing, the examiner produced a letter from the investor’s solicitors confirming that the investor had waived the other preconditions and would complete the transaction on the scheme’s effective date. The examiner asked the court to set that date as 8 July, which the judge did.
Because the investment money had not yet been provided, the judge also made an order under section 24(8) directing the investor to complete the investment on 8 July and giving the examiner and company liberty to apply. The judge said this would allow the parties to return to court quickly if an unforeseen difficulty arose. The order followed notice to the investor that it was being considered and an opportunity for the investor to be heard.
The court deleted a proposed provision that would have kept the company under court protection if the first investment was not made on time. The judge said the Act did not allow the protection period to be extended beyond the date the scheme took effect. The court also required the actual wording of an amendment to the company’s articles concerning redemption of preference shares for €20 to be included in the scheme, and ordered the company to file amended articles within 21 days.