[1996] 1 All ER 381; [1996] 1 WLR 1

Christopher Butcher – Company – Reduction of capital – Preference shares – Redeemable preference shares – Redemption – Failure to redeem – Whether company precluded from liability – Companies Act 1985, s 178(2).
Company – Shares – Purchase of shares with financial assistance of company – Plaintiffs agreeing to fund purchase of shares where company failing to redeem own shares – Company covenanting to maintain asset levels and indemnify plaintiffs against losses arising out of any breach of covenant – Company verging on insolvency and failing to redeem shares – Whether company’s liability in damages for breach of covenant amounting to financial assistance for purchase of own shares – Companies Act 1985, s 151(1).
Company – Scheme of arrangement – Sanction – Arrangement including entry into option agreement approved by court – Option agreement containing covenants by company – Whether potential liability in damages for breach of covenant amounting to unauthorised reduction of capital or gratuitous disposition of assets – Whether option agreement thereby ultra vires and unenforceable – Companies Act 1985, s 425.