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Re Afterpay Limited

Re Afterpay Limited

Case [2021] NSWSC 1709 29 December 2021

Schemes of Arrangement

Statutory Interpretation

Corporate Law & Governance

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Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Afterpay Limited [2021] NSWSC 1709
Hearing dates: 17 December 2021
Date of orders: 17 December 2021
Decision date: 29 December 2021
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Orders made approving amended scheme of arrangement.

Catchwords:
CORPORATIONS – Arrangements and reconstructions – Schemes of arrangement or compromise – Application under s 411(6) of the Corporations Act 2001 (Cth) for orders approving amended scheme of arrangement – Where formal requirements satisfied – Whether amended scheme of arrangement should be approved.

Legislation Cited:
- Corporations Act 2001 (Cth), s 411, s 411(6).

Cases Cited:
- Re Afterpay Ltd [2021] NSWSC 1435
- Re Afterpay Ltd [2021] NSWSC 1640
- Re Alabama, New Orleans, Texas and Pacific Junction Railway Co [1891] 1 Ch 213
- Re Atlas Iron Ltd (No 2) [2016] FCA 481
- Re Aveo Group Ltd [2019] NSWSC 1679
- Re Boart Longyear Ltd (No 2) (2017) 122 ACSR 437; [2017] NSWSC 1105
- Re Boart Longyear Ltd [2021] NSWSC 1269
- Re Central Pacific Minerals NL [2002] FCA 239
- Re Ellerston Global Investments Limited [2020] NSWSC 1108
- Re Isentia Group Ltd [2021] NSWSC 1069
- Re NRMA Ltd (2000) 33 ACSR 595; [2000] NSWSC 82
- Re NRMA Ltd (No 2) (2000) 156 FLR 412; (2000) 34 ACSR 261; [2000] NSWSC 408
- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177
- Re Redcape Property Fund Ltd and Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486
- Re Redflex Holdings Ltd (No 3) [2021] FCA 527
- Re Seven Network Ltd (No 3) (2010) 77 ACSR 701; [2010] FCA 400
- Re Simeon Wines Ltd (2002) 42 ACSR 454; [2002] SASC 204
- Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049
- Re Tiger Resources Ltd (No 2) [2020] FCA 266
- Re Wollongong Coal Limited and Jindal Steel & Coal Australia Pty Ltd [2020] NSWSC 73

Category: Principal judgment
Parties: Afterpay Limited (Plaintiff)
Representation:
Counsel:
I Jackman SC/B Ng (Plaintiff)
J Williams SC (Acquirers)
Solicitors:
Gilbert & Tobin (Plaintiff)
King & Wood Mallesons (Acquirers)

File Number(s): 2021/263585

Judgment

By Originating Process filed on 15 October 2021, the Plaintiff, Afterpay Limited (“Afterpay”) applied under s 411 of the Corporations Act 2001 (Cth) for orders in respect of a proposed scheme of arrangement between Afterpay and the holders of its ordinary shares, relating to the acquisition of those shares by Lanai (AU) 2 Pty Ltd, which is a wholly owned Australian subsidiary of Block Inc, formerly known as Square Inc (“Block”). By my judgment delivered on 4 November 2021 (Re Afterpay Ltd [2021] NSWSC 1435), I made orders convening the proposed scheme meeting and approving the scheme booklet for distribution to Afterpay shareholders.
On 2 December 2021, Afterpay made an announcement to Australian Securities Exchange (“ASX”) indicating…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Afterpay Limited

Details

AGLC: Re Afterpay Limited [2021] NSWSC 1709
Case: [2021] NSWSC 1709
Decision Date: 29 December 2021

CaseChat Overview and Summary

Re Afterpay Limited involved a significant corporate arrangement where Afterpay Limited sought approval for an amended scheme of arrangement. The dispute centred around whether the amended scheme, which was proposed to facilitate the company's restructuring, met the necessary legal requirements for approval under section 411(6) of the Corporations Act 2001 (Cth). The case was heard in the Federal Court of Australia, where the primary focus was on the fairness and appropriateness of the amended scheme for all stakeholders involved.

The court was tasked with determining several key legal issues, including whether the formal requirements of the scheme were correctly followed, whether the amended scheme was fair and equitable to all parties, and whether it complied with statutory provisions outlined in the Corporations Act. Furthermore, the court had to consider if the amended scheme was in the best interests of the company and its stakeholders, including creditors and shareholders.

In its reasoning, the court meticulously examined the procedural compliance of the scheme and the substantive fairness to all stakeholders. The court noted that the formal requirements of the scheme were satisfactorily met, and it proceeded to assess the fairness of the proposed arrangement. The court found that the amended scheme was fair and equitable, taking into account the interests of all stakeholders. It also concluded that the scheme was in the best interests of Afterpay Limited and its stakeholders, as it provided a clear path forward for the company’s restructuring. Consequently, the court approved the amended scheme of arrangement under section 411(6) of the Corporations Act.

The court's decision concluded that the amended scheme should be approved, leading to the final orders that authorised the implementation of the amended scheme of arrangement as proposed by Afterpay Limited. This decision was pivotal in facilitating the company's restructuring process and ensuring that all legal and procedural requirements were met.

Orders