‘(1) At any time when an application under section 253 for an interim order is pending … (b) the court may forbid the levying of any distress on the debtor is property or its subsequent sale, or both, and stay any action, execution or other legal process against the property or person of the debtor. (2) Any court in which proceedings are pending against an individual may, on proof that an application under that section has been made in respect of that individual, either stay the proceedings or allow them to continue on such terms as it thinks fit.’
‘as Lloyd J pointed out in Fletcher v Vooght[2000] BPIR 435 ,… one of the reasons for the court having a discretion under s255 is to act as a filter to avoid what Lloyd J refers to as the unnecessary and wasteful convening of creditors’ meetings if the proposal is one which is neither serious nor viable. As he points out, the consideration of a proposal by creditors involves time, effort and expense. If therefore the court’s view is that the proposal is neither serious nor viable, it is not right that the creditors should be exposed to the cost and expense of a meeting.’
‘[66] It is common ground that ‘serious and viable’ is the threshold which must be crossed: per Aldous J in Cooper v Fearnley; Re a Debtor (No 103 of 1994)[1997] BPIR 20 , at 21B-C. In Hook v Jewson Ltd[1997] BPIR 100 , Sir Richard Scott V-C described ‘serious and viable’ as ‘the yardstick’. [67] For an IVA proposal to be serious, it is not sufficient that it is seriously made or that it is made bona fide; it must have substance and [be] one which should seriously be considered by the creditors, or be capable of serious consideration. It should not be derisory. [68] There is no point in attempting to put forward anything like a shopping list of factors which ought to be taken into account when deciding whether or not a proposal is ‘serious’ as each application must turn on its own particular facts. For example, the contents of a proposal for a trading IVA involving regular contributions to the supervisor from trading income would be very different to a proposal involving a ‘one-off’ payment, as is proposed here … [69] In all cases, however, it is essential that the debtor who formulates his proposal gives ‘full and frank disclosure’ of all material facts and properly complies with his disclosure obligations under … the Insolvency Rules… [70] Absent proper disclosure and proper compliance with these rules, proper consideration is incapable of being given to a proposal and it therefore cannot be said that a proposal is one which should seriously be considered by creditors. [71] The fact that there may be doubts and questions (even if they are serious or well-founded ones) both as to the seriousness of a proposal and as to the adequacy of the disclosure made by a debtor, does not in my view, of itself mean that the proposal is not serious (and not viable). The position might perhaps be different if, on the hearing of an interim order application in such a case, the court was in a position to adjudicate upon and resolve those doubts and issues against the debtor, and could properly be called upon to do so. [72] In this particular case, both Mr Collings and Mr Briggs agree (in my view quite properly) that it is not my function to resolve the various doubts and issues of facts which have been raised. I am not called upon to do so and, as I understand both counsel to agree that I am not able to reject either party’s evidence out of hand. [73] I accept Mr Briggs’s submission in para 16 of his skeleton: ‘… that it is not the Court’s role on an interim order application to conduct a “mini-trial” of whether and the extent to which a debtor has failed to make proper/full disclosure of his affairs for the purpose of assessing whether an IVA is serious/viable. Insofar as there may be “suspicions” about the true extent of the debtor’s affairs these will be matters for the creditors to assess in the light of the consideration offered and the terms of the proposal’ [74] For an IVA to be viable it must be realistic and capable of being implemented. In Knowles and Others v Coutts & Co[1998] BPIR 96 , when considering the question of viability, Sir John Knox did so ‘in the sense of practicability and a probability of finally seeing the light of day as anticipated’
‘A Voluntary Arrangement is a more flexible and efficient procedure than bankruptcy and the administrative costs are also likely to be significantly less than in a bankruptcy. As can be seen from the Comparison Statement, the Official Receiver’s fees in a bankruptcy include a case administration fee of£2775 plus a general flat fee of£6000 and these fees are not chargeable in a Voluntary Arrangement. There is a possibility that an Insolvency Practitioner would be appointed as Trustee and his potential fees would be likely to exceed those of a Supervisor.’
‘I have worked for many years as a property developer and am a director of a number of companies. Historically I have derived my main income as a director and sole shareholder of K10 Developments Limited which was incorporated in 2008.’
‘My income will be dependent on my ability for structuring property deals and rebuilding a property development portfolio and I will make contributions into the Arrangement from this source.’
‘The Debtor proposes that contributions will be paid quarterly from his company [K10 Developments Limited] and has explained that the reason for quarterly payments rather than monthly payments is due to the nature of the project work carried out by the company. The debtor has proposed that 15% of any excess net income over and above the baseline salary [of£300,000 ] is paid to the Supervisor which allows for creditors to benefit from any increase in earnings. The debtor proposes that the quarterly payments will come from a salary from K10 Developments Limited (“K10”), the debtor’s main trading entity. If, he is unable to trade through this company then the debtor states that he will use one of his other companies to continue his trade. His salary will be reviewed quarterly to assess if it exceeds the baseline salary [of£300,000 ] set out in the proposal. In addition any dividends or drawings from any loan accounts will also be subject to review using the salary baseline [of£300,000 ]. As loan account drawings are gross payments any increase over baseline salary [of£300,000 ] will require a contribution of 30% of the sum drawn as set out in the proposal.’
‘I am the sole director and shareholder of [K10 Developments Limited] and am owed£1,196,747 . The company is not in a position to repay this debt and the balance sheet as at31 January 2023 showed an overall deficit of£663,940 . The company is also subject to a judgment debt from the creditor Leighton Denny amounting to£729,774 + interest. For the purpose of the Statement of Affairs I have shown the estimated to realise figure [for K10 Developments Limited] as nil.’
‘The debtor’s advisers confirm that there is little value in the assets shown in the balance sheet of K10 so therefore the creditors are unlikely to receive any dividend should K10 be liquidated’
‘The debtor has listed all the companies that he is a director or shareholder of in the proposal and .. the list agrees with a companies house search on the debtor’s name. The only company with assets shown on the last balance sheet is AHTL Roadway Limited however the shares are not held by the debtor and he advises that he has no interest in the offshore companies that holds the shares.’
‘… the benefit of the proposed arrangement rests almost wholly on the … debtor’s ability to pay£1500 per month to the supervisor. There is not one scrap of evidence as to how he proposes to set himself up in business, how he would finance it, what the gross income would be and what the expenses of the business would be, or indeed the source of the earnings…. I simply do not understand how, in the circumstances, it can be said … that the proposals gave a reasonable prospect that if the debtor was given a chance he would in time be able to meet his debts in full. The proposals, to my mind, are little more than a fairy story. It is not enough, in my judgement, for a debtor to say that if his hopes are realised the position under a proposed arrangement is likely to be better than if a bankruptcy were to ensue….’
‘… the debtor acknowledges that he must obtain his own legal advice on the admission and status of a matrimonial debt in a voluntary arrangement.’
‘It is understood that Matrimonial judgements remain due and payable by the debtor even if made bankrupt or entering into an IVA’
‘… if the proposals are merely designed to put off the evil day and are unlikely to be effective in the way in which they are stated to be going to operate, they deserve to be put an end to by the court ….’