High Court confirms material irregularity at creditors’ meeting (Bhundia v Dhar)
Restructuring & Insolvency analysis: This case involved a successful appeal by a creditor, Mr Bhundia against decisions made by a chair of a creditor's meeting (a company’s sole director, Mr Dhar) that was convened to appoint a liquidator. The court, applying a balance of probabilities test for indebtedness, agreed that Mr Dhar should have admitted Mr Bhundia’s vote for a higher value than he did, and should have rejected his own vote. It held that the incorrect admission of claims and rejection of part of Mr Bhundia’s claim constituted a material irregularity, confirming that Mr Bhundia should have controlled the voting outcome. Of particular interest is the court's comments on how adjudication awards (which formed part of Mr Bhundia’s claim) should be treated and whether the doctrines of ‘res judicata’ (the rule that the same issue should not be brought before the court more than once) and ‘merger’ ( a doctrine that prevents a party from seeking any further relief on a cause of action once a judgment has been given on it) were relevant in this context. On finding material irregularity, the court asked for further submissions on handing down the judgment as to what it should do next in terms of ordering a repeat decision procedure or some other order. Written by Hannah Drozdz, legal director PSL at Gateley.