Kapoor v National Westminster Bank Plc & Anor

Kapoor v National Westminster Bank Plc & Anor

Although an equitable assignee is entitled to vote as a creditor at a creditors’ meeting, the assignment and voting arrangement in this case constituted a material irregularity because it was solely designed to circumvent the statutory exclusion of associate votes, was wholly uncommercial, and lacked good faith, thereby subverting the legislative policy underlying the Insolvency Rules. The approval of the IVA was therefore properly revoked.

Parties
Appellant: Charnesh Kapoor; First Respondent: National Westminster Bank PLC; Second Respondent: Kian Seng Tan
Jurisdiction
England and Wales
Judgment Date
05 October 2011
Procedural Posture
Civil Appeal / Judgment on Appeal From High Court
Outcome
Appeal dismissed except for setting aside the order that the chairman’s decision to admit Mr Chouhen’s claim as creditor be set aside.
Legal Topics
Individual Voluntary Arrangement (iva), Assignment of Debt, Creditors' Meetings, Material Irregularity, Good Faith in Insolvency Proceedings
Insolvency Law Bankruptcy Individual Voluntary Arrangement (iva) Assignment of Debt Creditors' Meetings Material Irregularity Good Faith in Insolvency Proceedings

Case Brief

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Parties

Charnesh Kapoor

Appellant

National Westminster Bank PLC

First Respondent

Kian Seng Tan

Second Respondent

Procedural Posture

Civil Appeal / Judgment on Appeal From High Court

Legal Issues

  1. 1 Whether an equitable assignee of part of a debt is entitled to vote at a creditors’ meeting to approve an IVA
  2. 2 Whether there was a material irregularity at or in relation to the creditors’ meeting due to the assignment and voting arrangement

Ratio Decidendi

Although an equitable assignee is entitled to vote as a creditor at a creditors’ meeting, the assignment and voting arrangement in this case constituted a material irregularity because it was solely designed to circumvent the statutory exclusion of associate votes, was wholly uncommercial, and lacked good faith, thereby subverting the legislative policy underlying the Insolvency Rules. The approval of the IVA was therefore properly revoked.

Court Disposition

Appeal dismissed except for setting aside the order that the chairman’s decision to admit Mr Chouhen’s claim as creditor be set aside.

Orders

  • Paragraph 3 of the Judge’s order (setting aside the chairman’s decision to admit Mr Chouhen’s claim) is set aside.
  • The order revoking approval of Mr Kapoor’s IVA is upheld.