The High Court confirmed a revised scheme of arrangement for McEnaney Construction Limited after the examiner changed proposals that the court said it could not confirm as originally drafted.
In a judgment delivered on 25 February 2008, Ms Justice Finlay Geoghegan explained why she had declined to confirm the original proposals at a hearing on 12 February. The examiner presented modified proposals at an adjourned hearing on 14 February, and the court confirmed them. The judge said the changes addressed the issues raised and did not alter the substance of the scheme.
The company had been under court protection since 11 January 2008, when Michael McAteer was appointed examiner. He later recommended that the court confirm a scheme backed by members’ and creditors’ meetings. No one appeared to object at the 12 February hearing.
The first issue was a proposal to cancel the company’s 100 existing ordinary shares and issue 75 shares to an investor and 25 to Sean McEnaney. The scheme was based on the investor making €67.5 million available to the company, secured on its assets.
The judge said cancelling issued, fully paid shares would reduce the company’s share capital. In her view, the Companies (Amendment) Act 1990 did not expressly authorise that reduction as part of an examinership scheme, and the court could not use its implementation powers under section 24(8) to order an act the company itself was prohibited from carrying out under section 72(1) of the Companies Act 1963. She therefore considered that the original share-cancellation proposal could not be confirmed.
The modified scheme removed references to cancelling the existing shares and instead provided for 300 new ordinary shares to be issued to the investor at par, credited as fully paid, for €380.92. The judge noted that confirming a scheme did not itself change the company’s shareholding: the necessary company or board resolutions to issue and allot shares still had to be passed.
A second issue concerned changes to the company’s articles of association. The original proposals did not specify the intended amendments, as required for changes to take effect under section 24(7). The modified proposals specified amendments to articles 1 and 2. The court ordered that the amended articles be filed with the Companies Registration Office within 21 days.
The judge also directed that the confirmed proposals be included as a schedule to the court order and retained on the court file, after noting that proposals in an earlier examinership case had not been retained there.