CMS designs innovative restitution scheme for Redcentric

A cross-practice team at international law firm CMS has designed an innovative restitution scheme to compensate shareholders in relation to accounting irregularities at Redcentric plc, a leading UK provider of managed IT services to public and private sector customers. This is the first listed corporate restitution scheme to involve the issue of shares to claimants.

The scheme forms part of a settlement to conclude a three-year investigation by the FCA into Redcentric plc. The company will allow affected shareholders to claim a mixture of shares and cash (at their election) with the cash being provided from Redcentric’s existing cash resources and the proceeds of an institutional fundraising. Designing the scheme involved clearing a number of technical hurdles to enable the issue of shares to claimants and persuading the FCA to agree to accept this solution in place of imposing any financial penalty on Redcentric. The result is an incredibly innovative restitution scheme that is for the benefit of current shareholders and affected investors.

Iain Newman, CMS partner and Co-Head of the Corporate Team, said: “We are pleased to have been able to support Redcentric through this FCA investigation. CMS is experienced at offering strategic advice to listed companies in relation to accounting investigations and our team has designed an incredibly innovative restitution scheme that is for the benefit of all investors.”

Alison McHaffie, CMS partner in the Financial Services and Products Team, adds: “This announcement demonstrates the strength of CMS’s Corporate and Financial Services Teams who are experienced in acting for companies facing FCA investigations. Our cross-practice teams are able to work together seamlessly to provide our clients with expert advice right when they need it.”

The CMS team advising Redcentric was led by Alison McHaffie and Iain Newman with assistance from Elisabeth Bremner, Jenny Gray, Philippa Chatterton, Billy Bradley, Hannah Brash and Hannah Forsyth.