Re Billabong International Limited (No 2)

In the case of Re Billabong International Limited (No 2), the Court was tasked with approving a scheme of arrangement involving Billabong International Limited. The scheme, which was initially proposed and approved by the members, required alteration to accommodate an increase in the scheme consideration, which was approved by the members but not formally incorporated into the scheme. The application was brought by the plaintiff, who sought to amend the scheme of arrangement to reflect the increased consideration.

The central legal issue before the Court was whether it should approve the proposed alteration to the scheme of arrangement that had been agreed upon by the members, despite the fact that the alteration was not formally incorporated into the scheme prior to the members' approval. The Court had to consider the implications of the members voting on the scheme without full knowledge of the increased consideration and whether the alteration could be approved in light of the circumstances.

The Court found that the unusual circumstances surrounding the scheme meeting warranted special mention. Despite the fact that the members had approved the scheme as initially proposed, the Court was satisfied that the alteration to the scheme consideration was necessary and appropriate given the circumstances. The Court noted that the alteration was made in good faith and with the intention of ensuring the scheme's success. The Court also considered the importance of the scheme proceeding as planned, particularly in light of Boardriders’ debt financing arrangements and the potential impact on Billabong’s business if the transaction were to be delayed. Consequently, the Court approved the proposed alteration to the scheme of arrangement, modifying the definition of "Scheme Consideration" from $1.00 per Scheme Share to $1.05 per Scheme Share, and making corresponding amendments to the definitions of "Excluded Shareholder" and "Scheme Shareholder."

The Court further granted the plaintiff exemption from compliance with certain provisions of the Corporations Act 2001 (Cth) in relation to the scheme and granted liberty to apply for further orders. The Court's decision underscores the flexibility of the Court in approving schemes of arrangement, particularly in circumstances where the alteration is necessary to ensure the success of the transaction and has been agreed upon by the relevant parties.