McConvill, James (2005) Schemes of Arrangements, Selective Buy-Backs and Village Roadshows Preference Share Tussle: Entering the Matrix. Macquarie Journal of Business Law, 2. pp. 203-229. ISSN 1449-0269

Abstract

In February 2004, the Victorian Court of Appeal upheld a decision (comprised of two judgments) of Justice Mandie regarding the validity of a ‘scheme of arrangement’ proposed by Village Roadshow to engage in a selective buy-back of its A-Class preference shares. Mandie J’s decision at first instance, confirmed on appeal, not to approve the scheme of arrangement was significant not just because it put to rest a very public year-long tussle between the company and its preference shareholders, but also because of the legal implications of the decision- particularly in relation to the interpretation to be given to the buy-back provisions of the Corporations Act 2001 and the way in which schemes of arrangement can and will be utilised going forward. This paper assesses the issues that came before the Victorian Supreme Court and Court of Appeal for consideration, and reflects on the legal and commercial implications of the decisions. The author also responds to the assertion that Village Roadshow had to use a scheme of arrangement to effect the selective buy-back, and raises the question of whether schemes of arrangement are becoming overutilised.

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