Kapoor: Clarification on good faith in Individual Voluntary Arrangements, but also a missed opportunity
The Court of Appeal ( EWCA Civ 1083,  BPIR forthcoming) recently dismissed an appeal from a decision of His Honour Judge Hodge QC (sitting as a High Court judge) ( EWHC 255 (Ch),  BPIR 842), upholding the judge’s decision to revoke the approval of Mr Kapoor’s individual voluntary arrangement on the grounds of material irregularity under s 262 of the Insolvency Act 1986 (the Act). The headline news is made by the Court of Appeal’s decision as to the entitlement to vote at a creditors’ meeting when there has been an assignment, and the upholding of the principles in Cadbury Schweppes plc v Somji  BPIR 172, as regards the requirements of good faith. However, the decision represents a missed opportunity to interpret and clarify the meaning of r 5.23(4) of the Insolvency Rules 1986 (the Rules) in respect of how the votes of non-associated creditors should be taken into account for the purposes of such approval.
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