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In the matter of Cape Plc

Where asbestos-related claims would continue to arise over a long period and there was insufficient insurance cover, it was appropriate to sanction an unusual scheme of arrangement under s 425 of the Companies Act 1985 in order to provide long-term finance for claims and to protect the scheme companies from the risk of insolvency.

30 June 2006

The applicant group of companies (C) applied for an order sanctioning a scheme of arrangement under s 425 of the Companies Act 1985 between each company and its creditors with present or future asbestos-related claims. All the companies in the group were solvent but due to concerns over the uncertainty regarding asbestos-related claims they were being impeded in the development of their business. The proposed scheme involved providing for the payment of claims by a newly-formed subsidiary of C (D) and prohibiting their enforcement against the scheme companies. C was to provide initial funding for D and further funding would be provided subject to terms in ancillary documents. The scheme had been proposed in order to provide long-term financing of the claims of scheme creditors in a way that would provide C with significant protection from the risk of insolvency, and increase the likelihood of C being able to discharge its liabilities over time to the scheme creditors in full. Two cl...

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