Lawyers at Matheson say that a recent High Court judgment has provided the “most detailed judicial analysis” of the composition of classes of creditors since the inception of examinership.

In a case involving Mac Interiors Limited, Mr Justice Michael Quinn ruled that the court had no jurisdiction to confirm the examiner’s proposals for a scheme of arrangement.

The judge ruled said that there had been a material irregularity in relation to the meetings at which the proposals were considered by the company’s creditors.

In a note on the firm’s website, the Matheson lawyers explain that the irregularity in question was creation of a class of creditors called ‘retained project creditors’ who had claims that arose from projects that had not been terminated by the company or by the relevant creditors.

‘Improperly constituted’

This class voted in favour of the examinership proposals, despite a proposal that they would receive the same dividend as a class of unsecured creditors, who had voted against.

Mr Justice Quinn concluded, however, that the class of ‘retained project creditors’ had been improperly constituted.

Under the Companies Act 2014, the judge said, each class should be confined to persons "whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest".

He determined that the difference between the interests of the two classes of creditors in this case – the retained project creditors' shared expectation of continued trading relationships – was not sufficient.

EU rules

As a result, the court decided, the retained project creditors should have been included in the class of unsecured creditors, and a legal requirement that at least one class of validly constituted creditors voted in favour of the proposals had not been met.

The Matheson lawyers say that the judgment is particularly significant in the light of new EU rules that will require the backing of an ‘in-the-money’ class of creditors in order for a court to approve a scheme of arrangement.

‘In-the-money’ creditors are those who are in line to receive some payment.