STEVEN JAMES TOMPSON AND KAREN MICHELLE TOMPSON v GUY MARSHALL DISTON [2015] NZHC 2050

STEVEN JAMES TOMPSON AND KAREN MICHELLE TOMPSON v GUY MARSHALL DISTON [2015] NZHC 2050

The court refused to approve the proposal because its terms were not reasonable and not calculated to benefit the general body of creditors: the dividend to unsecured creditors was so small as to provide no practical advantage to some creditors, creditors did not have all relevant information (real estate appraisals) when voting, and the proposal conferred an element of preference to the secured creditor, so approval was not appropriate.

Citation
[2015] NZHC 2050
Parties
Judgment Creditors: STEVEN JAMES TOMPSON AND KAREN MICHELLE TOMPSON; Judgment Debtor: GUY MARSHALL DISTON; Trustee (applicant): J Scutter
Court
High Court
Jurisdiction
New Zealand
Judgment Date
28 August 2015
Procedural Posture
Insolvency Act Proposal Approval / Application for Court Approval of Proposal Under S333
Outcome
Application for approval of proposal refused
Legal Topics
Proposal Approval Under S333, Reasonableness of Proposal, Creditor Voting and Majority Rule, Preference to Secured Creditors, Adequacy of Dividend to Unsecured Creditors
Insolvency Bankruptcy Civil Procedure Proposal Approval Under S333 Reasonableness of Proposal Creditor Voting and Majority Rule Preference to Secured Creditors Adequacy of Dividend to Unsecured Creditors

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Parties

STEVEN JAMES TOMPSON AND KAREN MICHELLE TOMPSON

Judgment Creditors

GUY MARSHALL DISTON

Judgment Debtor

J Scutter

Trustee (applicant)

Procedural Posture

Insolvency Act Proposal Approval / Application for Court Approval of Proposal Under S333

Legal Issues

  1. 1 Whether the proposal is reasonable and calculated to benefit the general body of creditors
  2. 2 Whether unsecured creditors would be better off in bankruptcy than under the proposal
  3. 3 Whether the dividend offered to unsecured creditors is so small as to be derisory

Ratio Decidendi

The court refused to approve the proposal because its terms were not reasonable and not calculated to benefit the general body of creditors: the dividend to unsecured creditors was so small as to provide no practical advantage to some creditors, creditors did not have all relevant information (real estate appraisals) when voting, and the proposal conferred an element of preference to the secured creditor, so approval was not appropriate.

Court Disposition

Application for approval of proposal refused

Orders

  • Application for approval of proposal refused
  • There will be no order for costs