Should I stay or should I go? (Kean v Lucas (as liquidator of J&R Builders (Norwich) Ltd))

Should I stay or should I go? (Kean v Lucas (as liquidator of J&R Builders (Norwich) Ltd))

How should a liquidator handle a request for his removal under section 177 of the Insolvency Act 1986 (IA 1986) and the Insolvency Rules 1986 (IR 1986)? Warren Bank of St Philips Stone Chambers reports, in the light of recent High Court ruling.

Original news

Kean v Lucas (as liquidator of J&R Builders (Norwich) Ltd)) [2016] EWHC 2684 (Ch), [2016] All ER (D) 50 (Nov)

How did the issue arise?

IA 1986, s 177 provides the mechanism under which a liquidator may be removed from office. In the case of a creditors’ voluntary liquidation (CVL), only a specially-summoned general meeting of the company’s creditors may do so, ‘…in accordance with the rules’ (IA 1986, s 177(2)(b)).

IR 1986, SI 1986/1925, r 4.114, states that the liquidator shall summon a meeting to remove him under IA 1986, s 177(2)(b) ‘if requested by 25 per cent in value of the creditors, excluding those who are connected with it’.

Of equal importance is IR 1986, SI 1986/1925, r 4.57, which provides that any request by creditors to the liquidator for a meeting to be summoned shall be accompanied by a list of the creditors concurring with the request and the amount of their respective claims in the winding up.

What were the facts?

Mrs Kean had requested the liquidator of J&R Builders (Norwich) Limited (the company) to convene a meeting of creditors under IA 1986, s 177 to consider his removal as liquidator. She had made the request in her capacity as ‘a significant creditor and former director and shareholder’ of the company. The liquidator refused to requisition the meeting on the ground that the request was not supported by 25% in value of the company’s creditors, as required by IR 1986, SI 1986/1925, r 4.114, and required ‘strict proof’ of the claim. Mrs Kean applied to Mr Registrar Briggs for a declaration that the liquidator

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