On 30 October 2017, Carr J approved the banking business transfer scheme by which, as part of an internal restructuring, the entire business of Kleinwort Benson Bank Ltd (KBBL) was transferred to SG Kleinwort Hambros Bank Ltd (Kleinwort Hambros) pursuant to Part VII FSMA 2000. In addition, the judge confirmed a capital reduction by KBBL for the purposes of preparing it for dissolution following the transfer of its business under the scheme.
In response to notices sent to KBBL’s customers, which then numbered over 3,000, and advertisements placed in the Gazette and the national press, KBBL received 22 telephone enquiries, 5 written responses and 21 email enquiries. There were no objections to the transfer (the one concern that was raised was minor), nor any party alleging that they were adversely affected by the transfer. Neither the PRA nor the FCA (having been provided with, among other things, details of the customer responses and enquiries) attended the hearing or made representations in relation to the transfer. At the hearing, Carr J sanctioned the transfer scheme.
Of note was the approach taken by the judge to the drafting of the order. It has increasingly become the practice of the court to deliver judgments in relation to transactions (schemes of arrangement under Part 26 CA 2006, cross-border mergers under the Companies (Cross-border Mergers) Regulations 2007 and banking and insurance business transfer schemes under Part VII FSMA 2000), even where the transactions are uncontroversial. Unusually, instead of delivering a judgment, Carr J requested that his order recite the reasoning he had accepted in approving the transfer scheme, being that: (a) the scheme gave effect to the reasoned commercial decisions of the boards of both Kleinwort Hambros and KBBL; (b) the PRA and the FCA did not oppose the application; (c) all statutory requirements had been complied with; (d) KBBL’s customers had been notified of the scheme and had been provided with a fair summary of its terms and effects; and (e) no affected persons claimed to be adversely affected by the transfer.
This approach (which Carr J also adopted in relation to the Part 26 CA 2006 scheme in respect of The City Pub Company (West) plc has not been adopted by any other judges hearing such transactional applications. It is unlikely to become a widespread practice.