Application to appeal decisions made by the chairman on a meeting for a company voluntary arrangement
| Author | Mark Watson-Gandy |
| Pages | 253-267 |
OBJECTIVE
Creditors and members of the company have a right of appeal to the court against decisions made by the chairman of the company voluntary arrangement (CVA) meeting as to whether to accept a proof of debt for voting purposes.
Issues that could be challenged in this way include decisions such as the rejection of a creditor’s claim to vote, the value to be put on the voting or even as to the voting itself.
The court has the power to call a new meeting or make other consequential orders where it is satisfied that the circumstances giving rise to the appeal demonstrate that there has been unfair prejudice or a material irregularity.
APPLICATION
The application is made by application notice on Form IAA.
The application must be made within 28 days of the decision beginning with the first day upon which the chairman’s report was made available to the court.
COURT FEES
Where fresh proceedings need to be brought, a court fee of £280 is payable.
254 Corporate Insolvency Practice
is made by consent or without notice in existing proceedings, a court fee of £50 is payable.
SERVICE
The usual rule is that, subject to any other express provision, the application must be served at least 14 days before the date fixed for the hearing.
Service may be effected personally
EVIDENCE
A witness statement should be prepared in support of the application. This should address:
ƒ the identity of the deponent;
ƒ the stage at which the CVA has reached;
ƒ what the deponent’s interest is in the decision (whether he is a creditor or a member, what value should be given to his vote and why);
ƒ what decision the chairman made;
ƒ when the decision was made;
ƒ why that decision is wrong;
ƒ if a new meeting or other consequential orders are sought, that there has been unfair prejudice or a material irregularity and why the deponent says this is so.
The witness statement should exhibit:
ƒ a copy of the arrangement or proposal;
ƒ proof of the debt relied on;
ƒ any documents evidencing the decision made and its date.
KEY STATUTORY PROVISIONS
Paragraphs 29 to 36 of Schedule A1 to the Insolvency Act 1986
Summoning of meetings
29(1) Where a moratorium is in force, the nominee shall summon meetings of the company and its creditors for such a time, date (within the period for the time being specified in paragraph 8(3)) and place as he thinks fit.
(2) The persons to be summoned to a creditors’ meeting under this paragraph are every creditor of the company of whose claim the nominee is aware.
Conduct of meetings
30(1) Subject to the provisions of paragraphs 31 to 35, the meetings summoned under paragraph 29 shall be conducted in accordance with the rules.
(2) A meeting so summoned may resolve that it be adjourned (or further adjourned).
(3) After the conclusion of either meeting in accordance with the rules, the chairman of the meeting shall report the result of the meeting to the court, and, immediately after reporting to the court, shall give notice of the result of the meeting to such persons as may be prescribed.
Approval of voluntary arrangement
31(1) The meetings summoned under paragraph 29 shall decide whether to approve the proposed voluntary arrangement (with or without modifications).
(2) The modifications may include one conferring the functions proposed to be conferred on the nominee on another person qualified to act as an insolvency practitioner, or authorised to act as nominee, in relation to the voluntary arrangement.
(3) The modifications shall not include one by virtue of which the proposal ceases to be a proposal such as is mentioned in section 1.
(4) A meeting summoned under paragraph 29 shall not approve any proposal or modification which affects the right of a secured creditor of the company to enforce his security, except with the concurrence of the creditor concerned.
(5) Subject to sub-paragraph (6), a meeting so summoned shall not approve any proposal or modification under which—
(a) any preferential debt of the company is to be paid otherwise than in priority to such of its debts as are not preferential debts, or
(b) a preferential creditor of the company is to be paid an amount in respect of a preferential debt that bears to that debt a smaller proportion than is borne to another preferential debt by the amount that is to be paid in respect of that other debt.
(6) The meeting may approve such a proposal or modification with the concurrence of the preferential creditor concerned.
(7) The directors of the company may, before the beginning of the period of seven days which ends with the meetings (or either of them) summoned under paragraph 29 being held, give notice to the nominee of any
256 Corporate Insolvency Practice
modifications of the proposal for which the directors intend to seek the approval of those meetings.
(8) References in this paragraph to preferential debts and preferential creditors are to be read in accordance with section 386 in Part XII of this Act.
Extension of moratorium
32(1) Subject to sub-paragraph (2), a meeting summoned under paragraph 29 which resolves that it be adjourned (or further adjourned) may resolve that the moratorium be extended (or further extended), with or...
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