Re McNally; McNally v (1) Dymond (2) National Westminster Bank plc  EWHC 1685 (Ch);  BPIR 604
(Chancery Division, District Judge Musgrave, 31 August 2012)
A bank had security over the debtor's property. With the benefit of a surveyor's report, it valued that security at £350,000 when serving a statutory demand and presenting a bankruptcy petition against the debtor. The debtor proposed an Individual Voluntary Arrangement (IVA), and obtained an interim order. The chairman of the creditors' meeting allowed the bank to vote its unsecured indebtedness against the proposal on the basis of its valuation and, as a consequence, the necessary 75% majority was not achieved. The debtor appealed against the chairman's decisions on that vote and many others, although the other issues were immaterial if the chairman's decision was correct. The district judge dismissed the appeal, discharged the interim order and made a bankruptcy order on the bank's petition, on the basis that the chairman was correct to deal with the bank's unsecured indebtedness on the basis of the bank's valuation. His Honour Judge Purle QC (sitting as a High Court judge) dismissed the debtor's appeal. In the absence of his own proper valuation evidence, the debtor faced an uphill struggle in challenging the chairman's decision. On the basis of the bank's valuation, together with the bank's entitlement to add litigation and receivership costs to the security, the irreducible minimum debt meant that the bank held more than 25% of the unsecured indebtedness.
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...