THE HIGH Court has approved the scheme of arrangement for the survival of International Securities Trading Corporation (ISTC), paving the way for the sale of the specialist Dublin lender.

The scheme, which comes into effect tomorrow, allows for the sale of ISTC for €5 million to UK investment bank Collins Stewart. It was approved yesterday by Mr Justice Peter Kelly in the Commercial Court. It must also be cleared by the Competition Authority and an application for mergers clearance was submitted to the authority late last month.

The company, which lends capital to financial institutions, was placed under court protection last November when it became insolvent due to the crisis in the credit markets. Collins Stewart is proposing to raise an additional convertible loan capital of €2 million this year to develop the business.

The scheme had been passed at creditors' meetings last week with about 69 per cent of the votes of international banks, which are owed €435.6 million, and trade creditors. The Revenue also supported the scheme, which was devised by the company's examiner, John McStay, who was appointed last November after some of its assets were downgraded due to the financial crisis.

Bank and trade creditors will receive 12 cent for every euro owed, forcing them to write off debts of €385 million. A group of unsecured creditors, listed in the scheme under "subordinated liabilities", voted against it, but they were outvoted by the value of the bank creditors. They will have to write off €270.5 million. The total amount to be written off in ISTC is €820 million, which includes about €165 million invested in ISTC by wealthy Irish individuals.

ISTC was founded in May 2005 by Tiarnan O'Mahoney, the current chairman of the Pensions Board and former chief operating officer of Anglo Irish Bank, and it employs 18 people. ISTC's problems arose following the downgrading of its structured investment vehicles (SIVs) assets.