Vol 15 (2018) - Issue 1

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Two Sides of the Same Coin? Class Composition and Fairness in English and Australian Schemes of Arrangement

Introduction
Australia and England are seeing an increased use of creditor schemes of arrangement to effect complex restructurings, and this is giving rise to complex issues of class composition and fairness needing to be addressed by the courts. In the recent restructuring of Boart Longyear Limited ('BLY') through a creditors’ scheme of arrangement, the Australian courts have demonstrated particular pragmatism in addressing issues of class composition and the court’s overall fairness discretion, including in an Australian first, making use of compulsory mediation in order to rescue what may otherwise have been a scheme likely to fail on fairness grounds. In this article we examine the decisions of the Australian courts in the BLY schemes and look at English cases where similar issues have arisen. We also consider the impact that these decisions may have on the restructuring landscape in Australia and the UK going forward, particularly in relation to the approach that parties may take to complex schemes of arrangement where the different treatment of creditors may give rise to potential class composition and fairness issues.