Gujarat High Court approves Composite Scheme between companies & stakeholders without creditor meetings

The High Court of Gujarat approved the Composite Scheme of Arrangement between two companies and their stakeholders. Meetings of Equity Shareholders, Preference Shareholders, and Secured Creditors were dispensed with as they consented to the scheme. Unsecured Creditors' meetings were waived due to no sacrifices required from them. The court ordered the petition's admission, scheduled a final hearing, mandated publication in specified newspapers, notified the Central Government, permitted direct service, and dispensed with notice in the Government Gazette.

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Issues:
Sanction of Composite Scheme of Arrangement between two companies and their shareholders and creditors.

Analysis:
The High Court of Gujarat heard a petition filed by Shalby Limited seeking approval for a Composite Scheme of Arrangement with another company and their stakeholders. The court noted that meetings of Equity Shareholders, Preference Shareholders, and Secured Creditors were dispensed with as they had consented to the proposed Scheme. Unsecured Creditors' meetings were also waived since no sacrifices were required from them, and no reduction or extinguishment of their liabilities was involved. In light of these circumstances, the court made the following orders: (i) Admission of the petition, (ii) Scheduling the final hearing for 9.9.2016, (iii) Publication of the petition notice in specified Gujarati and English newspapers, (iv) Notifying the Central Government as per Section 394(A) of the Companies Act, 1956, through the Regional Director, (v) Permitting direct service in addition to the regular mode of service, and (vi) Dispensing with the notice in the Government Gazette.

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