Bruce Peebles & Company v Bain & Company
| Jurisdiction | Scotland |
| Judgment Date | 02 July 1918 |
| Date | 02 July 1918 |
| Docket Number | No. 76. |
| Court | Court of Session |
Lord President, Lord Johnston, Lord Skerrington.
CompanyManagementArrangement between company and debenture-holdersArrangement by directors without consulting companyApplication to Court to order meetingsCompetencyCompanies (Consolidation) Act, 1908 (8 Edw. VII. cap. 69), sec. 120.
A petition in name of a company was presented to the Court under sec. 120 of the Companies (Consolidation) Act, 1908, setting forth a scheme of arrangement between the company and its debenture-holders, and craving the Court (1) to order meetings of the company and the debenture-holders for approval of the scheme; and (2) to sanction the scheme, if approved at these meetings. The petition was in fact presented on the initiative of the directors, who had entered into a provisional agreement with certain of the debenture-holders, and the company had neither considered the scheme nor approved of the provisional agreement. In the articles of association of the company it was provided that the management of the company shall be vested in the board, who shall have and exercise all such powers of the company as are not by Act of Parliament or these presents expressly declared to be exerciseable by the company in general meeting.
Objection having been taken to the competency of the petition on the ground that, as the company had not been consulted, this was not an arrangement proposed between a company and its creditors within the meaning of sec. 120,Held (dub. Lord Johnston) that, in view of the powers conferred on the directors by the articles of association, the petition was competent, as there was nothing in any Act of Parliament, or in the articles, which required the previous sanction of the arrangement by the company in general meeting.
Dailuaine-Talisker Distilleries v. Mackenzie, 1910 S. C. 913, commented on.
On 9th February 1918 a petition in name of Bruce Peebles & Company, Limited, incorporated under the Companies Acts, 1862 to 1907, was presented to the Court under section 120 of the Companies (Consolidation) Act, 1908,* craving the Court to order meetings of the members to be convened to consider a scheme of arrangement between the Company and the debenture-holders.
The prayer of the petition was in the following terms:To appoint intimation of this Petition to be made on the Walls and in the Minute-Book in common form; to order meetings to be convened (a) of the members of Bruce Peebles and Company Limited; (b) of the holders of the mortgage debentures thereof, and (c) of the holders of the unsecured debentures thereof, for the purpose of taking into consideration, and if so resolved, of approving of the arrangements set forth in the Scheme of Arrangement hereinbefore specified and hereto annexed; to authorise the board of directors of the Company to fix the day and place of said meetings to appoint the Secretary of the Company or its agents to give at least seven days' notice thereof to the said members and debenture holders by advertisement [in certain newspapers]; to appoint the Secretary of the Company or its agents to post seven days at least previous to the day of such meetings, a notice stating the place, day, and hour and the object of the proposed meetings, and accompanied by a form of proxy and a copy of the said Scheme of Arrangement to every member and debenture holder (or in the case of joint members or holders to the first-named) to his address as it appears in the Registers of Members and holders respectively; to authorise the Secretary of the Company when giving notice of the meetings to the members of the Company to incorporate therein a notice as to the proposed alterations on the Articles of Association, so that the Special Resolution thereanent may then be considered
with the view of passing and afterwards confirming the same; to appoint Frederic Ernest Andrews, the Chairman of the Company [whom failing certain other directors in succession], to act as Chairman of the said meetings, and to direct the Chairman so appointed to report the result of such meetings to your Lordships; and on resuming consideration hereof with the report of the Chairman of the said meetings, and upon the necessary Special Resolution as to the alterations on the Articles of Association being passed, to sanction the said Scheme of Arrangement.
The circumstances in which the petition was presented were as follows:
The petitioning Company was incorporated on 5th December 1908 with the object of acquiring and carrying on the business of the existing firm of Bruce Peebles & Co. (in liquidation) under a scheme of arrangement which received the sanction of the Court of Session on 10th November 1908. Under this arrangement the existing debentures of the old Company were surrendered to the new Company and were cancelled, the former debenture-holders being given secured debentures in the new Company. The other creditors of the old Company were given unsecured debentures in the new Company. Both classes of these new debentures became repayable upon 1st July 1918.
The new Company after its formation carried on business with considerable success, its net profit for 1917 being 14,584, 5s. 5d.; but the directors came to be of opinion that the Company was not in a position to provide the money required for the repayment of the debentures which fell to be repaid in July 1918. They accordingly drew up a scheme under which the secured debentures (amounting to 49,850) were continued at a higher rate of interest, a fund being created for...
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Edinburgh Railway Access and Property Company v Scottish Metropolitan Assurance Company
...Alteration of Memorandum of Association, p. 125. Counsel also pointed out that Mr Wilton referred to Bruce Peebles & Co. v. Bain & Co., 1918 S. C. 781, as a further authority, although the case as reported did not deal with the question of 10 [1911] 2 Ch. 361. ...
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Validus Holdings Ltd v IPC Holdings Ltd and Max Capital Group Ltd
...23 - 25. 4 This, of course, depends on the nature and terms of the scheme. The scheme in Bruce Peebles & Co. v William Bain & Co. 1918 S.C. 781, was a creditors scheme, and hence within the delegation of the management of the company to the board. 5 Bye-law 2 provides - "The business of the......