London's scheme approved

THE FIRST voluntary scheme of arrangement for a quoted company was approved yesterday when creditors owed pounds 14m by London Securities, a property group, voted to save the company from being placed in administration, writes Jason Nisse.

A similar attempt to put together a scheme for West Industries failed earlier this year, leading to the company going into receivership. The only other quoted company to be resuscitated by a scheme was Chancery Securities, but it had already been placed in administration.

Nearly 90 per cent of the creditors voted in favour of the scheme. The only dissenter was the Inland Revenue. London Securities' shareholders have agreed to back a rights issue at 1p, raising around pounds 500,000 to be used for working capital for the two-year scheme.

David Pearl, the group's chairman, said he thought an orderly sale of the group's properties over two years would realise more for shareholders than if they were liquidated now. John Verrill, a partner of Lawrence Graham, the law firm that backed the scheme, said he expected other troubled companies to be able to use the same route to avoid collapse.