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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

01 NOV 2011

Kapoor: Clarification on good faith in Individual Voluntary Arrangements, but also a missed opportunity

Introduction

The Court of Appeal ([2011] EWCA Civ 1083, [2011] BPIR forthcoming) recently dismissed an appeal from a decision of His Honour Judge Hodge QC (sitting as a High Court judge) ([2011] EWHC 255 (Ch), [2011] 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 [2001] 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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