At the convening stage under s 411(1), the court should not resolve difficult contested questions about the merits of a scheme; refusal to convene is only warranted where the scheme is clearly bound to fail. Where a scheme involves a capital reduction, the relevant public policy is that reflected in s 256B(1)(b) — whether the reduction would 'materially prejudice' the company's ability to pay its creditors — and a merely theoretical increase in risk of non-payment is insufficient. Persons affected by a proposed capital reduction may vindicate their interests through proceedings under s 1324 of the Act or by opposing the scheme at the approval hearing under s 411(4)(b).
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