Creditor meeting under arrangement scheme not recalled absent patent illegality, fraud, or clear impracticability at the threshold.

An ex parte order convening a creditors' meeting under a compromise and arrangement proposal will be recalled only if the scheme is shown at the threshold to be patently illegal, fraudulent, or so unreasonable and impracticable that a creditors' meeting would be an empty exercise. On the materials before the court, the omission of loan creditors was curable, objections to deferred repayment of deposits could be addressed through the statutory sanction process, and the proposed classification of creditors was not shown to be compelling at that stage. The court therefore declined interim interference, allowed the meeting to proceed, and preserved the company's assets and records pending consideration of the proposal.

---

---

Issues: Whether the ex parte order convening a creditors' meeting under the compromise and arrangement provisions should be recalled or interfered with at the interim stage on the grounds of alleged illegality, impracticability, defective classification of creditors, and pending winding-up proceedings.

Analysis: A court may, in an appropriate case, intervene after a meeting has been directed and may entertain a creditor's objection under its inherent powers or in aid of the winding-up jurisdiction. Such interference, however, requires a strong showing that the scheme is patently fraudulent or illegal, or that it is so unreasonable or impracticable that holding the meeting would be an idle formality. On the materials before the court, the omission to provide for loan creditors was curable, the question of deferred repayment of deposits could be addressed with the sanction contemplated by the statute, and the proposed division of creditors into separate classes was not shown to be compelling at that stage. The court also held that feasibility objections should ordinarily be left to the commercial wisdom of the creditors at the meeting, while safeguarding the assets of the company in the meantime.

Conclusion: The order convening the creditors' meeting was not recalled. The meeting was allowed to proceed, the winding-up proceedings were not stayed, and the provisional liquidator was restrained from taking further steps in respect of the company's properties, assets, and records pending the meeting.

Final Conclusion: The proceedings were kept alive for consideration of the proposed compromise, but interim interference with the convening order was declined, subject to preservation of the company's status quo pending the creditors' meeting.

Ratio Decidendi: An ex parte order convening a creditors' meeting under a scheme of arrangement will be recalled only where the scheme is shown at the threshold to be patently illegal, fraudulent, or so unreasonable and impracticable that further consideration by the creditors would be an empty exercise; otherwise, the court should leave the proposal to the creditors' commercial judgment while protecting the estate from dissipation.

---