English Schemes and the Jelly Donut Theory

Welcome to the thirteenth Pari Passu newsletter,

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Today, we will learn more about:

1. English Schemes

2. The Jelly Donut Theory

English Schemes

English schemes, or schemes of arrangement, were established under Part 26 of the UK’s Companies Act (2006) and allow a company to enter a “compromise” or “arrangement” with its shareholders, creditors, or any mix of each. These schemes may be pursued without the company in question being insolvent, opening the practice to a wide array of possibilities. Put simply, schemes of arrangement allow a company to change the rights of all/some of its shareholders/creditors given specific statutory voting requirements are met. This is an incredibly powerful tool with immense utility, particularly in cross-border and international restructurings. The process and rules governing English schemes, their key features, and an example of the practice are all laid out in the following slides.

Process and Rules

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