CPP Compensation – What happens next? Scheme of Arrangement


So you have received a letter from CPP telling you about possible compensation in relation to a Card Protection Policy or an Identity Protection Policy.  What happens next?

 

The proposed ‘scheme of arrangement’

What is a scheme of arrangement?

A scheme is an arrangement between a company and its creditors (in this case, potentially, you). It is governed by Section 895 of the Companies Act 2006.

How is the scheme approved?

In order for the scheme to be approved, a number of steps have to take place:

(a) it must be approved by a majority in number and 75% in value of scheme creditors that vote. Where there is more than one class of scheme creditor (see below), each class must approve the scheme in separate meetings;

(b) it must be approved by the High Court of England and Wales; and

(c) a copy of the High Court’s approval must be registered at the Registrar of Companies.

Classes of scheme creditor

Creditors may have rights which are so different it is impossible for them to consult together. If so, the law requires creditors to be split into separate classes and each class will have separate meeting (and a separate vote). In order for the scheme to be implemented, it must be approved by each class of scheme creditor.

CPP has considered the rights of those policyholders who may be entitled to compensation in determining how many classes of scheme creditors there are and how many meetings need to be held.

CPP is proposing to call a single meeting of all scheme creditors. This is appropriate because the rights of the scheme creditors are similar enough to consult together, regardless of whether that scheme creditor bought a card protection policy or an identity protection policy and regardless of whether that scheme creditor bought the product from CPP (whether directly or following an introduction from a card issuer or a bank) or directly from, a card issuer or a bank.

Next Steps

We will make an application to the High Court on 7 October 2013 for an order to convene the scheme creditors’ meeting referred to above. Scheme creditors are not required to attend this Court hearing. However, a scheme creditor may attend this Court hearing to raise any objection to CPP’s proposed classes.

If the High Court grants the order to convene the scheme creditors’ meeting referred to above and the scheme is approved at that meeting, we will make an application to the High Court to sanction the scheme. It is expected that the hearing will take place on 14 January 2014. Scheme creditors are not required to attend this Court hearing. However, a scheme creditor may attend this Court hearing to raise an objection to the scheme.

The High Court address is the Royal Courts of Justice, Strand, London WC2A 2LL.

Further information

You can find out more about the scheme and see answers to some frequently asked questions at www.cppredressscheme.co.uk




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