Globe Equities Ltd v Globe Legal Services Ltd and Others
| Jurisdiction | England & Wales |
| Neutral Citation | [1999] EWCA Civ 905 |
| Date | 1999 |
| Year | 1999 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Before Lord Justice Hirst, Lord Justice Peter Gibson and Lord Justice Clarke
Insolvency - creditor cannot oppose variation
A creditor who had waived his right to a dividend under an individual voluntary arrangement with a debtor could not oppose a subsequent agreement between the debtor and other creditors to vary the terms of the arrangement, despite the absence of any express provision for variation.
The Court of Appeal so held dismissing, save for an appeal on costs which was allowed, an appeal by the applicant, Manish Raja, from a decision of Sir John Vinelott who held on May 8, 1997 that a five-year individual voluntary arrangement made by the second respondent, Stuart Goodman, and supervised by the first respondent, David Rubin, that as a creditor who had waived his entitlement to a dividend in the individual voluntary arrangement, he had no sufficient interest to justify proceedings challenging a proposed variation of the arrangement by agreement between the debtor and his creditors and that since he had no such interest he should pay costs on an indemnity basis.
Mr Victor Joffe and Mr Timothy Collingwood for Mr Raja, Mr Edward Bailey for Mr Rubin and Mr David Halpern for Mr Goodman
LORD JUSTICE PETER GIBSON said Mr Goodman, was a solicitor who had practised as a sole practitioner under the style Bowling & Co. Mr Raja and four other employees, had become partners in Bowling & Co without taking over the accumulated debts of the sole practice.
The Inland Revenue having petitioned for Mr Goodman's bankruptcy, he had entered into an individual voluntary arrangement with his creditors in January 1992. The agreement contained no power for it to be amended.
Under it, Mr Raja had waived any entitlement to a dividend on a debt of £63,000 owed him by Mr Goodman. Mr Goodman's partners were to make ex gratia contributions to the creditors.
In March 1996 all the creditors save Mr Raja had accepted an offer from Mr Goodman. Mr Raja had applied for directions under section 263(3) of the Insolvency Act 1986, claiming that any variation to the arrangement should be approved by all the creditors.
The judge could see no reason why all the creditors entitled to share in the proceeds of the assets brought into an individual voluntary arrangement should not agree to vary their rights, despite the absence of an express power to vary the arrangement.
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