CHAPTER XIX
RECONSTRUCTION AND SCHEMES OF ARRANGEMENT

IT is proposed in this chapter to give some account of the
reconstruction of companies, indicating briefly the methods
by which such reconstructions can be carried out. ‘Recon-
struction” is a word which is frequently loosely, but in-
accurately, used to include amalgamations, absorptions,
reorganisations, and arrangements of all kinds, and any such
transaction is commonly described as a reconstruction scheme,
and it is in that sense that the word is used as the title of this
chapter.

Into the reasons for reconstruction it is not proposed to
enter, but it may be of use to show what may be effected by
reconstruction and by what methods.

Reconstruction may be effected in the following ways:-

I. By special Act of Parliament;

2. By a sale under s. 234 of the Companies Act, 1929;

3. By a sale under the powers in the memorandum of

association;

By a scheme of arrangement under s. 153 of the Act;
By a scheme of arrangement with creditors alone
under s. 251 of the Act;

By the acquisition of a complete or controlling interest
in a company.

Of the above methods, 1 and 5 need but passing mention.
As regards 1, it may sometimes occur, even now, that the
legal and technical difficulties in the way of carrying out a
reconstruction by the usual methods are insuperable, and,
in such circumstances, the only possible course is to obtain a
special Act of Parliament, whereby all obstacles may be
surmounted. This procedure is, of course, expensive.

As regards 5, a scheme of arrangement with creditors alone
under s. 251 of the Act, this procedure is uncommon, and
unsatisfactory in all but the simplest cases. An arrangement
between a company about to be, or in the course of being,
wound up voluntarily, is. hv the section, binding on the

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