Rule 1.50 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs) with a Moratorium
Chairman's Procedure for Admission of Creditors Claims for Voting Purposes at a CVA creditors meeting
Insolvency Rule 1.50 sets out the wide powers invested in the chairman of the creditors meeting called to consider approving a Company Voluntary Arrangement (CVA) proposal. It will be recalled from Insolvency Rule 1.14 that the chairman of the CVA meeting is the insolvency practitioner acting as Nominee. Rule 1.50 gives power to the CVA creditors meeting chairman to,
- Determine whether an individual claiming to be a creditor is entitled to vote or not
- Either accept the amount claimed by an individual creditor for voting purposes or reject the whole, or part, of the claimed amount.
These powers of the chairman of the CVA creditors meeting are always subject to the court's possible intervention upon application by a creditor or the chairman to the court.
The actual wording of Insolvency Rule 1.50 is reproduced below in bold.
The Insolvency Rules 1986 - Rule 1.50 - Procedure for admission of creditors' claims for voting purposes (In the type of CVA where a prior moratorium was obtained).
(1) Subject as follows, at any creditors' meeting the chairman shall ascertain the entitlement of persons wishing to vote and shall admit or reject their claims accordingly.
(2) The chairman may admit or reject a claim in whole or in part.
(3) The chairman's decision on any matter under this Rule or under paragraph (3) of Rule 1.49 is subject to appeal to the court by any creditor or member of the company.
(4) If the chairman is in doubt whether a claim should be admitted or rejected, he shall mark it as objected to and allow votes to be cast in respect of it, subject to such votes being subsequently declared invalid if the objection to the claim is sustained.
(5) If on an appeal the chairman's decision is reversed or varied, or votes are declared invalid, the court may order another meeting to be summoned, or make such order as it thinks just.
The court's power to make an order under this paragraph is exercisable only if it considers that the circumstances giving rise to the appeal are such as give rise to unfair prejudice or material irregularity.
(6) An application to the court by way of appeal against the chairman's decision shall not be made after the end of the period of 28 days beginning with the first day on which the report required by paragraph 30(3) of Schedule A1 to the Act has been made to the court.
(7) The chairman is not personally liable for any costs incurred by any person in respect of an appeal under this Rule
Insolvency Rule 1.50 demonstrates that the chairrman of a company voluntary arrangement creditors (CVA) meeting has a legal duty to scrutinise each and every creditor's vote to establish whether the vote must be counted in whole, in part or not at all.