Schemes of arrangement: 
managing end date risk

A dispute between a target and bidder can cause a scheme of arrangement to fail simply by running down the clock to its 'end date', as the recent Mayne Pharma/Cosette transaction illustrates. This article examines that risk and how automatic end date extensions, adopted in several recent deals, can prevent disputes from derailing transactions.

In brief

• A scheme of arrangement may fail if a dispute between the target and bidder remains unresolved at the scheme's 'end date'. The Mayne Pharma/Cosette transaction in 2025 illustrates how litigation can run down the clock.
• An increasing number of transactions — including Newmont/Newcrest, Alcoa/Alumina and current deals involving Reliance Worldwide Corporation, FleetPartners Group and Cleanaway — provide for an automatic extension of the end date when a dispute leads to court proceedings. That allows the transaction to proceed once the dispute is resolved.

Schemes of arrangement: managing end date risk

A recurring risk in schemes of arrangement is that a prolonged dispute between the target and bidder may cause the transaction to fail simply because time runs out.

Schemes typically include an ‘end date’ condition requiring the scheme process, including final court approval, to be completed within a set period. This is usually 6 to 9 months after the scheme implementation deed is signed, though it may be longer where regulatory approvals are expected to take substantial time.

Although 6 or 9 months is usually ample time to complete a scheme, it may not be enough if a dispute leads to litigation. Time is then likely to run out, allowing either party to terminate the transaction.

Examples

Several transactions encountered this problem during the COVID-19 pandemic. Disputes led to threats of litigation, but the agreements’ end date provisions left insufficient time for the courts to resolve them. As a result, the transactions were terminated or renegotiated, irrespective of the merits of the dispute.

The 2025 Mayne Pharma/Cosette deal is the best-known recent example. The scheme implementation deed, signed in February 2025, set an end date in November 2025 — ordinarily ample time for a cash scheme.

In May 2025, however, a dispute arose over the material adverse change condition. Despite expedited proceedings in the Supreme Court of New South Wales, the court’s decision was not delivered until late October 2025, just weeks before the end date.

Two further complications followed.

First, the transaction required FIRB approval, which became the subject of a Takeovers Panel dispute. Mayne alleged that Cosette had improperly departed from its original intentions for a South Australian manufacturing plant in order to undermine the prospects of approval. The Panel found in Mayne’s favour, but FIRB approval was ultimately refused. The approaching end date would have left little time to address issues raised by FIRB.

Second, Cosette appealed the Supreme Court’s decision on the material adverse change condition. The appeal process took 12 months and a decision was not delivered until October 2026, well after the end date. Even without the FIRB approval issue, it is far from certain that the court would have approved the scheme while the appeal remained pending.

It should go without saying that allowing a transaction to fail simply because the market lacks a mechanism to resolve disputes in time is a poor regulatory outcome.

Automatic end date extension

One solution is to provide in the scheme implementation deed for an automatic end date extension if a dispute leads to either party commencing proceedings for specific performance or injunctive relief. In that event, the end date would be extended for a set period, say, 40 business days after final resolution of the dispute or such later date determined by the court.

Several transactions have adopted provisions of this kind, including Newmont’s acquisition of Newcrest in 2023, Alcoa’s acquisition of Alumina in 2024 and current transactions involving Reliance Worldwide Corporation, FleetPartners Group and Cleanaway, among others.

Parties adopting such a provision should consider two refinements.

First, the implementation deed should provide for additional consideration, an extra dividend or a ticking fee if the transaction extends beyond the original end date. Otherwise, profits accumulating in the company during the extension would accrue to the bidder, potentially unfairly.

Second, the deed could require both parties to expedite the dispute resolution. It could, for example, require them to bring any dispute before the Takeovers Panel, on the basis that the Panel could resolve it much faster than a court.¹ The Reliance Worldwide transaction with Brookfield included such a provision.

Faster dispute resolution benefits all parties, including a bidder that might otherwise have to acquire the business long after signing the original implementation agreement.

Conclusion

As the market becomes more aware that transactions can fail because time runs out and seeks to address that risk, I expect more scheme implementation deeds to provide for an automatic end date extension when a dispute is prolonged.

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1. When you think about it, that outcome is very similar to what would happen if the transaction was undertaken as a takeover bid as court litigation is prohibited and any dispute would need to go before the Takeovers Panel. Based on the Mayne Pharma dispute before the Takeovers Panel, it appears that the Panel would be willing to hear a dispute about the operation of a scheme implementation deed (leaving aside issues directly related to section 411 of the Corporations Act). The Panel would decide whether unacceptable circumstances may be created by one party refusing to resolve a dispute improperly.