CFL Finance Ltd v Rubin & Anor (As Joint Supervisors of Moises Gertner's Voluntary Arrangement)

CFL Finance Ltd v Rubin & Anor (As Joint Supervisors of Moises Gertner's Voluntary Arrangement)

There was a material irregularity at or in relation to the creditors' meeting because Kaupthing's vote should not have been admitted, or only for a nominal amount, as its claim was compromised or unenforceable by virtue of the KSA. Alternatively, the KSA breached the principle of good faith among creditors, and the vote should have been excluded. The approval of the IVA is revoked.

Parties
Applicant: CFL Finance Limited; First Respondent (joint Supervisor/nominee of Iva): David Rubin; Second Respondent (joint Supervisor of Iva, Stayed for Health): David Buchler; Third Respondent (debtor): Moises Gertner
Jurisdiction
England and Wales
Judgment Date
27 January 2017
Procedural Posture
Insolvency (iva Challenge) / Judgment on Application to Revoke Approval of IVA Under Section 262 Insolvency Act 1986
Outcome
Approval of the IVA revoked due to material irregularity; no further creditors' meeting ordered.
Legal Topics
Individual Voluntary Arrangements (iva), Material Irregularity, Unfair Prejudice, Good Faith in Creditor Voting, Debt Compromise, Creditors' Meeting Procedure
Insolvency Law Bankruptcy Law Individual Voluntary Arrangements (iva) Material Irregularity Unfair Prejudice Good Faith in Creditor Voting Debt Compromise Creditors' Meeting Procedure

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Parties

CFL Finance Limited

Applicant

David Rubin

First Respondent (joint Supervisor/nominee of Iva)

David Buchler

Second Respondent (joint Supervisor of Iva, Stayed for Health)

Moises Gertner

Third Respondent (debtor)

Procedural Posture

Insolvency (iva Challenge) / Judgment on Application to Revoke Approval of IVA Under Section 262 Insolvency Act 1986

Legal Issues

  1. 1 Whether Kaupthing was entitled to vote at the creditors' meeting approving the IVA given the existence of a settlement agreement (KSA) with the debtor.
  2. 2 Whether the KSA rendered Kaupthing's debt compromised, unenforceable, or of only nominal value for voting purposes.
  3. 3 Whether the approval of the IVA was procured by material irregularity or in breach of the principle of good faith among creditors.

Ratio Decidendi

There was a material irregularity at or in relation to the creditors' meeting because Kaupthing's vote should not have been admitted, or only for a nominal amount, as its claim was compromised or unenforceable by virtue of the KSA. Alternatively, the KSA breached the principle of good faith among creditors, and the vote should have been excluded. The approval of the IVA is revoked.

Court Disposition

Approval of the IVA revoked due to material irregularity; no further creditors' meeting ordered.

Orders

  • Approval of the Proposal given at the creditors' meeting is revoked.
  • No order for a further creditors' meeting.