In Re Boart Longyear Ltd (No 2) the Supreme Court of New South Wales recently approved two creditor schemes of arrangement on the application of Boart Longyear Limited. The schemes were considerably amended after the Court indicated at the first hearing that it was not likely to approve the original schemes on fairness grounds. Significantly, the Court ordered the parties to attend a mediation to resolve the fairness issues – something that has not been done before in a scheme of arrangement in either Australia or the United Kingdom.
Following the amendments, Boart Longyear asked the Court to approve the schemes of arrangement and to consent to the alterations under s 411(6) of the Corporations Act 2001. Section 411(6) allows the Court to grant its approval to a compromise or arrangement subject to such alterations or conditions as it thinks just. Previously, s 411(6) had only dealt with alterations of a minor or technical nature. However, the Court held that the power of the Court under s 411(6) should not be confined to alterations or conditions which fell short of being material. In this case, substantially all creditors affected by the alterations supported the alterations, and they "provide[d] a proper mechanism to implement a complex compromise or arrangement", so the alterations came within the scope of 411(6).
See the full case here.