Scheme of arrangement class composition: ex parte convening order stood, and no separate meeting was ordered for offshore lenders.

At the summons stage of a scheme of arrangement, an ex parte order directing convening of meetings will be recalled only for clear jurisdictional error, fraud, patent illegality, or comparable misrepresentation; allegations of misclassification of creditors, suppression of facts, and lack of bona fides were not enough, and the recall request was rejected. Creditors are to be grouped as one class unless their rights are so dissimilar that they cannot consult together with a view to their common interest; on the record, the offshore foreign-currency lenders did not establish a distinct homogeneous class requiring a separate meeting, so no separate meeting was directed.

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Issues: (i) whether the ex parte order directing convening of meetings under section 391(1) could be recalled on the grounds of alleged misclassification of creditors, suppression of material facts, and alleged lack of bona fides; (ii) whether the offshore foreign-currency lenders formed a separate class of secured creditors entitled to a separate meeting.

Issue (i): whether the ex parte order directing convening of meetings under section 391(1) could be recalled on the grounds of alleged misclassification of creditors, suppression of material facts, and alleged lack of bona fides.

Analysis: The jurisdiction to recall an ex parte order exists, but it is to be exercised sparingly and only where the earlier order is shown to be patently illegal, erroneous, or obtained by misrepresentation. At the summons stage in a scheme matter, the Court's role is limited and it does not finally adjudicate the merits of the proposed arrangement. Questions such as alleged suppression, alleged diversion of funds, and the effect of pending collateral proceedings were not found sufficient to justify recall at this preliminary stage, particularly because the scheme had emerged from prior deliberations and the objectors were not left without remedy at the stage of final sanction.

Conclusion: The request to recall the ex parte order was rejected.

Issue (ii): whether the offshore foreign-currency lenders formed a separate class of secured creditors entitled to a separate meeting.

Analysis: The applicable test is whether the creditors are so dissimilar in their rights that they cannot consult together with a view to their common interest. Classification for the purpose of convening meetings is primarily for the company to formulate, subject to the Court's power to refuse sanction later if the class is wrongly constituted. On the record, the offshore lenders had not established that they constituted a distinct homogeneous class requiring a separate meeting, and the Court declined to interfere at the threshold by splitting the secured creditors into a sub-class.

Conclusion: No separate meeting was directed for the offshore foreign-currency lenders.

Final Conclusion: The order convening the meeting was allowed to stand, and the scheme proceedings were left to be pursued and contested at the meeting stage and again at the stage of final confirmation.

Ratio Decidendi: At the summons stage of a scheme of arrangement, the Court will not recall an ex parte order or reconstitute classes unless a clear jurisdictional error, fraud, or patent illegality is shown, and creditors are to be treated as one class unless their rights are so dissimilar that they cannot consult together for a common interest.

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