A RESCUE plan designed to secure the future of crisis-hit Equitable Life has been given the legal all-clear, opening the way for a £250m injection from Halifax.

The High Court sanctioned a compromise "scheme of arrangement" which won the approval of 98 per cent of with-profits policyholders at meetings held last month.

Halifax, now part of the HBOS group, bought the mutual society's assets for £500m last year and offered to inject £250m if a compromise deal was in place by March 1.

Mr Justice Lloyd said that, despite objections from 30 dissenters, he was satisfied the scheme was one of which an "intelligent and honest man", acting in his own interests, might reasonably approve.

Under the scheme, holders of Guaranteed Annuity Rate policies (GARs) were asked to give up their guaranteed pension rates in return for a 17.5 per cent increase in the value of their policies. Non-GARs were given a 2.5 per cent uplift for both accepting the increase given to GARs and agreeing not to sue the society for alleged mis-selling in not being told about potential problems faced by the society when they bought their policies. The society's problems came to a head when it lost the final round of a legal dispute over the rights of its GAR policyholders, whose guaranteed rates became too expensive to honour when interest rates and inflation fell.

Equitable tried to resolve the problem by paying a smaller final bonus on the policies, but after a long legal battle the House of Lords ruled that the society had to meet the guarantees, leaving it with a £1.06bn liability.

The judge said the fact that such large numbers voted for the scheme was a major factor in his decision.