Schemes of Arrangement


A Scheme of Arrangement (solvent or not) is essentially a UK court sanctioned global commutation of a defined book of business, for which creditor approval is sought in special meetings. For the scheme to become effective, it must be approved by more than 50% by number and 75% by value of voting creditors. It can be applied to non-UK portfolios if a “sufficient connection” with the UK can be shown to the court’s satisfaction.

One of our UK companies, Lakewood Insurance, has been closed through a scheme process with a significant additional benefit for the former shareholders. Hampden can assist European clients with assessing the viability of a scheme for a non-UK portfolio, and can incorporate such a process in our tailored finality solution.
Brief guide to a scheme
Draft scheme documents are prepared to set out the compromise agreements that are proposed, and to define different classes of creditors (if needed).
An information letter is sent out to all potential creditors describing the main points of the scheme.
A court hearing is held to decide on whether the company will be allowed to convene a creditors meeting. If so, the full scheme information is sent out to the creditors.
Creditors meet and vote.
With the approval from the creditors' meeting the court is asked to sanction the scheme.
Bar date for filing claims is circulated to all parties, and the claims submission process starts.
If claims cannot be agreed within the stipulated period, they will be referred to an independent adjudicator for decision.
Once all claims have been agreed and paid within the stated time periods, the scheme is closed.