Chairman incorrectly deals with creditor's claim in IVA vote—AB Agri Ltd v Curtis and others

Chairman incorrectly deals with creditor's claim in IVA vote—AB Agri Ltd v Curtis and others

Reuben Comiskey, barrister at Radcliffe Chambers, discusses AB Agri Ltd v Curtis in relation to challenging an individual voluntary arrangement (IVA) on the ground of material irregularity and examines how the decision may affect creditors and debtors.

Original news

AB Agri Ltd v Curtis and others [2016] Lexis Citation 510, [2016] All ER (D) 121 (Jul)

The court allowed the applicant company’s challenge to an IVA, where an insolvency practitioner (IP) had erred in valuing the applicant’s claim at £1 and/or rejecting it altogether. That had been a material irregularity within section 262(1) of the Insolvency Act 1986 (IA 1986).

What was the background to this case?

Mr Curtis was a director and the major shareholder of Agricultural Contract and Marketing Company Ltd (ACMC), whose business was pig farming. From 2007, AB Agri Ltd supplied pig feed to ACMC. From the outset, AB Agri required Mr Curtis to guarantee ACMC’s liabilities. In April 2015, ACMC went into administration, owing in excess of £470,000 to AB Agri.

In May 2015, AB Agri served a statutory demand on Mr Curtis, and then a bankruptcy petition in June 2015. Mr Curtis sought to propose an IVA, and also indicated that he would be opposing the petition on the basis that the debt was disputed. The court made an interim order and gave directions for evidence to be filed in relation to the dispute.

In October 2015, the creditors’ meeting took place to consider the IVA proposal—with Mr Maxwell as chairman. AB Agri voted against the IVA, but it was admitted to vote for only £1. The IVA was approved, but if AB Agri had been admitted for the full value of its claim the IVA would have been rejected. AB Agri challenged the IVA pursuant to IA 1986, s 262—on the grounds of material irregularity.

What were the issues before the judge?

In

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.