Finance Update March 2009 - Olswang

Restructuring and
Insolvency
Restructuring and Insolvency Cases
Liquidators
In the case of Managa Properties Ltd v Louise Brittain [2009] EWHC 157 (Ch) it was held that a court
would not direct a company in compulsory liquidation to convene a creditors' meeting to consider the
replacement of the liquidator, unless doing so would be in the best interests of the liquidation.
Facts: The applicant (M) was dissatisfied that the liquidator (L) had neither accepted nor rejected the proof
of debt submitted. M served a notice on L requiring L to summon a creditors' meeting for the purpose of
removing L as liquidator. L rejected this request. M then applied to court for an order under s172(3)
Insolvency Act 1986 that L convene a creditors' meeting. This was dismissed and M appealed this
decision and the rejection of the proof of debt it had by that stage received from L.
Decision: It was held that the court had complete discretion on matters of this kind and it was necessary for
M to satisfy the court that it was in the best interests of the liquidation for the creditors' meeting to be
convened. As there was no justifiable criticism of L's general conduct of the liquidation, the appeal was
dismissed. However, M was given leave to appeal the proof of debt.
Prescribed part
In the matter of International Sections Limited (in creditors' voluntary liquidation) [2009] EWHC 137 (Ch) an
application was considered to disapply the prescribed part under s176A(5) Insolvency Act 1986.
Facts: The liquidators applied to court to disapply the prescribed part, on the basis that the cost of making
the distributions to the unsecured creditors would be disproportionate to the benefits, as even the largest
unsecured creditors would receive less than £1000.
Decision: The application was refused as small dividends would often result from a distribution of the
prescribed part and as a significant sum remained for distribution it was not reasonable to deprive the
unsecured creditors of whatever sum they might receive.
(See also In the matter of Hydroserve Ltd [2007] EWHC 3026 (Ch) and In the matter of Courts plc (in
liquidation) [2008] EWHC 2339 (Ch).)
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