- Creditor’s collateral advantage breached good faith principle (Gertner v CFL Finance Ltd and another)
- What are the practical implications of the judgment?
- What was the background?
- What did the Court of Appeal decide?
- Material irregularity—discharged, unliquidated or unascertained debt
- Material irregularity—good faith
- Unfair prejudice caused by the terms of the IVA
Restructuring & Insolvency analysis: Stephen Atherton QC, of 20 Essex Street, examines a Court of Appeal decision that a settlement agreement between the appellant debtor and a bank had given the bank a collateral advantage not available to other creditors, such as the first respondent, which had placed it in a position of conflict with their interests. This had breached the good faith principle and should have prevented it from voting on an individual voluntary arrangement (IVA) proposal to the potential detriment of the first respondent and the remaining creditors.
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