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Parent company guarantee – importance of drafting See CLM: ¶4696+, ¶5469, ¶6603 |
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Wolsey Securities Ltd v Abbeygate Management Services (Hampton) Ltd [2006] EWHC 1493 (QB) |
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In a case arising out of a failed joint venture, the court held that a parent company guarantee in the joint venture agreement did not cover payments due under an ancillary facility letter because the drafting was consistent with them being separate documents. The court reached this conclusion even though the JV agreement contained covenants relating to the facility letter and the entire agreement clause in the JV agreement referred to both documents. In particular, the court’s view was that the entire agreement clause read awkwardly and was likely to be the result of using a standard clause without modification to take account of the context. In addition, the court held that the guarantee did not cover payments provided for in a document annexed to the JV agreement because there was no actual undertaking in the JV agreement to pay them. Comment: In a transaction where a parent company guarantee in the main agreement is intended to cover obligations in ancillary or annexure documents, this should be specified in the drafting of the guarantee itself. The entire agreement clause cannot be relied upon to incorporate obligations in ancillary/annexure documents into the main agreement. |
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Scheme of arrangement – meaning of meeting See CLM: ¶6516 |
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The court has held that a meeting of shareholders/creditors to approve a scheme of arrangement must be attended by two or more persons (which could occur through the use of technology as well as face-to-face). The only exception to this rule is where the class of persons required to attend the meeting consists of only one person. In such cases, a meeting attended by that person or his proxy will be sufficient, or the person may give his consent to be bound by the scheme without the need for a meeting (e.g. by signing a resolution to that effect). The court does not have jurisdiction to sanction a scheme which is approved by a "meeting" attended by only one person (or his proxy) if there is no evidence that he is the only person in his class. |
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Re Altitude Scaffolding Ltd [2006] EWHC 1401 (Ch) |
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