Davis v Price  EWHC 323 (Ch);  BPIR 200
(Chancery Division, David Richards J, 21 February 2013)
Two debtors proposed Individual Voluntary Arrangements (IVAs). Two creditors, whose debts were treated as contingent by the chairman of the creditors' meetings and were valued at £1, successfully challenged the approval of the IVAs under s 262 of the Insolvency Act 1986. The district judge held that the two creditors' claims should be admitted at the level of £35,000, but marked as ‘objected to', and made an order for costs of £7,000 to the two creditors. He further ordered that the IVA approvals be suspended to allow the debtors to put forward revised proposals. The revised proposals were approved, but the two creditors did not vote in respect of their costs of £7,000 contending that the debts claimed by them were limited to the sums due at the date of the original interim orders; had they voted in respect of the £7,000, the IVAs would not have been approved. They served statutory demands in respect of the sums due in costs, which were set aside by a district judge. David Richards J dismissed the two creditors' appeals. When the approval of an IVA was suspended it ceased to bind creditors. New creditors might appear at any later creditors' meeting and new debts might be added to the debts of existing creditors. The debts were not limited to those due at the date of the interim order. The two creditors could therefore have voted in respect of the £7,000 costs award at the second creditors' meeting, and the liability was thus covered by the IVAs approved at the further meeting.
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