AMGO QC confirms what they will be doing will be substantially the same as the drafts that have been submitted to the court today. Judge is CONTENT for the order to stay the same as it is on the understanding expressed in open court, taking into account judge's observations... nothing else from the AMGO QC. Mr Fisher asked for comments.... nothing to add! Here we go!
[gone quiet... judge reading] - he read it in preparation of the hearing. Asked if anyone wants to draw attention. 2 points brought. Amendments will be made in accordance with whats gone on today (assume the Q&A/FAQs on website). 2nd point concerns the chair person... Chairman is at liberty to conclusively [gah missed it] -seem to be clarifying that the meeting can take place and votes recorded and if there is an argument to be raised at the sanction hearing, they would not be precluded to do so. Suggestion is to remove the word "conclusively". Judge seems to agree. Nothing else in the order that is necessary to discuss but they want a moment to consider...
The FCA are clear that this SOA does not reflect the way they would have done things (to paraphrase) but they accept it is for the scheme creditors and the court to make their assessment of the scheme. Its present attitude and reservation of rights do NOT represent a road block standing in the way of the scheme. In these circumstances the judge will convene a single meeting of creditors in accordance with the draft order proposed! They're going to look at it now...
Last bit - any road blocks. 3 short matters. 1). use of an SPV as the scheme vehicle. Judge previously expressed the view that this does not raise a jurisdictional issue. Quoting something about Pizza Express refinancing and Justice Zacaroni (spelling?) as analogues. Our judge agrees with his views. AMGO has the advantage of separating the ongoing business from the SOA. This matter will be examined again at the sanction hearing. At the present time this is NOT an obvious road block to scheme approval. 2nd matter: scheme creditors authorise scheme supervisors to execute a deed of release relating to all scheme creditor claims against the lender (parent, director, etc, etc). The inclusion of a release does NOT constitute a blot (I think - positive) on the scheme. On order to make this effective, you need to avoid the ricochet claims - judge agrees. Thirdly - it sis necessary to consider the attitude of the FCA. Judge has already referred to the letter that whilst they did not support it, they would not take any regulatory steps nor would they appear today or the sanction hearing to oppose, although they reserve the right to change their mind.
Voting arrangements - (missed a bit) judge notes some comments about valuing the claims of participating claimants. Judge talking about a spectrum which at one end treats all claims equally at £1 with the consequence that scheme creditors would be dominated by the claims of the FOS (£10M). At the other end, it could depend on an estimate of each individual claim, advanced by a scheme creditor. With potentially 1M scheme creditors and guarantors, it is impossible to conceive that this can be done in advance. What one is looking for is some practical machine that enables weight to be properly and appropriately distributed amongst scheme creditors. What company proposes to do is to assume all loans and guarantees have been mis-sold and to admit the claim. Judge - This is a "sensible attempt at making a reasonable attempt at valuing a redress claim" FOR VOTING purposes. No other practical arrangement has been suggested and the judge IS CONTENT with this!!
Method of participation... Accepts difficulties in holding a meeting, thus webcast and telephone facility proposed with voting being available via an online portal that will remain open during the scheme meeting itself. The meeting has been prepared with the principles outlined by a justice/case (missed the number). Our judge does not consider that there is ANY flaw in these arrangements at an organisational level. Whether they are effective will be disclosed in the chairman's report at the sanction hearing.
Sanction hearing... the question is whether there is adequate time for consideration of the scheme. In circumstances where a degree of urgency arises from the lenders financial state etc and taking into account the practice statement letter being circulated 8wks ago, considerably earlier than normal (to paraphrase). Judge says the period proposed here is the same as previous schemes that have been accepted (Cash Loans case, not dissimilar).
Moving on to question of sufficient clarity... it is not the judges function to approve the explanatory statement but to consider any glaring deficiencies in it. The judge notes care has been taken with the language and degree of formality. Whilst it is essential the formal requirements must be satisfied, it is right to note company has prepared additional material that is easily accessible to support understanding of the explanatory note incl. 6 videos to be posted on the website and a social media campaign. The efficacy of this shall be reviewed at the sanction hearing. The judge invited, during the course of the hearing, AMGO to provide short and clear emphasis on the fact that if any scheme creditor has any claim, they get in touch with them (to paraphrase). Judge is referencing the suggestion of the FAQ section to be added to the website as this is thought to be a more effective way of communicating. Judges sees NO issue with explanatory statement as it stands (to paraphrase). The rest are questions for the sanction hearing.
A link was sent to all scheme creditors for whom the lender had contact details (89%), it was also posted on the website, it was also subject to advertisements in the Mirror and the Mail. the papers most likely to be read by the demographic. This has meant there has been some 8wks for consideration and press comment about the scheme. He thinks this is sufficient in the lead up to the hearing. Practice statement letter - sets out the nature of information that must be conveyed. Judge considers it DID convey adequate information in a form that is "general capable" of being understood by the relevant people as demonstrated by a). the level of engagement after circulation... Albeit no one can be sure everyone understood all of it. Judge notes again some thought the letter referred to a class action not an SOA. Judge says some misunderstandings cannot be avoided. there have been some criticisms that the practice letter was in language some would find difficult to understand. Judge says "if so the opportunity now arises to express the fundamental questions in a different form". A balance has to be struck between accurate information and summarising it in a way it can be understood by the majority. It can't be the case that the letter has to be addressed to the lowest common denominator.
:D Happy to do 'proof' :D
Right, back on full time... Seems he has been summarising why these distinct groups should not form different classes. He does not see a reason to fracture the class. A single class will serve the purpose!!! The outcome will be up for scrutiny in review and under the terms of the chairman's report (down the line I assume).
Judge praising (I think) the inclusion of borrowers whose loans go back over 6yrs, beyond the limitation period. Does not think including them creates fundamental class dissimilarity.
Judge is discussing the inappropriateness of creating classes for these likely very small groups.
Does recognise the refinancing is an 'unfair' issue but recognises you can't create loads of classes for every single difference.
He's still going. Summarising issues about reducing outstanding balance for those who have refinanced with others. i.e. loan no longer with AMGO so wouldn't benefit from the set-off.
By the way, I assume the fact this is recorded it will be available, so folk will be able to check my message time stamps against the recording!?
Summarising on the 3rd party debt purchaser who has been willing to sell the loans back to AMGO, so clearing up that issue about people with outstanding loans originally with AMGO and now with others.
Looks like he is summarising the potential for a split between creditors who would offset (current loan holders) and those who would get cash (old borrowers). Sorry - quality has dropped off... can focus in 7mins if it is still on!
Summarising on the RPC report...
Still summarising... one hurdle passed!
Judge has approached the class composition question and ACCEPTS the submission due to no fundamental dissimilarity!