“[T]he above is an estimate only. Should the Supervisor be unable to pay dividends in the amounts and on the dates stated this shall not constitute default/breach of the Arrangement on my part unless the Supervisor notify/notifies the Arrangement Creditors in writing that the reason that they are unable to pay the dividends is because of default/breach of the Arrangement on my part.”
“a. The debtor’s financial position is not materially different from that which it is represented to the creditors to be in the proposal; b. There is no manifest unfairness in the proposal; c. The debtor has a proven record for achieving value based outcomes in his specialist sector and a fair balance is struck between the interests of the debtor and their creditors; d. I have not been made aware of any reason which could result in the proposal being rejected.”
“6.1 We [sic] have considered the debtor’s proposal and the comments above and are of the opinion that: 6.1.1 the debtor’s financial position is not materially different to that represented to the creditors in the proposal; 6.1.2 the proposal has a real prospect of being implemented as specified within the terms of the proposal; and 6.1.3 there is no unavoidable and manifest unfairness in the proposal.”
“First, a debtor who puts forward a proposed voluntary arrangement must be not only honest, but should take care to put all relevant facts before creditors: per Vinelott J in Re a Debtor (No 2389 of 1989)[1991] Ch 326 , at 337. The object of the 1986 Act and of the 1986 Rules is to ensure that every proposal for an individual voluntary arrangement is characterised by complete transparency and good faith by the debtor: per Judge LJ in Cadbury Schweppes plc v Somji[2001] 1 WLR 615 , at 629. Secondly, the nominee when discharging any of his functions, has a duty to exercise a professional independent judgment, informed by his qualifications and skills; per Harman J in Re a Debtor (No 222 of 1990) ex parte Bank of Ireland (No 2)[1993] BCLC 233 , at 235. Thirdly, in assessing the performance of that obligation, account must be taken of the context in which it is to be performed. A nominee is initially heavily reliant upon the debtor. But where doubts reasonably arise as to the reliability (or, I think, sufficiency) of that information, the nominee must satisfy himself that he has received enough information of adequate quality to arrive at a fair provisional view as to whether a claim should be admitted, (and a fair view as to the minimum value to be attributed to any unascertained debt). However, this will not require him personally to verify every figure: he is involved in a process which is designed to be speedy and robust, and is only required to take reasonable steps having regard to the range of variables set out by Lindsay J in Greystoke v Hamilton-Smith and Others, Re a Debtor (No 140 IO of 1995)[1997] BPIR 24 , at 28. Fourthly, a material irregularity may occur in relation to the debtor's proposal, or his statement of affairs, or the preparation of the nominee's report to the court, or in relation to the nominee's chairmanship of the creditors' meeting. The court is concerned to look at the whole process. Fifthly, not every mistake or omission will found the jurisdiction to set aside the result of the meeting. The section speaks of ‘material irregularity’, and the adjective is important. An irregularity is ‘material’ if, objectively assessed, it would be likely to have made a material difference to the way in which the creditors would have considered and assessed the terms of the proposed IVA; see Cadbury Schweppes plc v Somji[2001] 1 WLR 615 , per Robert Walker LJ, at 626 (who also drew attention to the need to consider not only those personally present at a creditors' meeting but also those who had given proxies to the chairman or another). Sixthly, although the chairman of the creditors' meeting would ordinarily be the nominee (and hence someone experienced in insolvency procedure) he cannot be expected to resolve difficult disputes about debts. The scheme of r 5.17 of the 1986 Rules was clearly explained in the judgment of Harman J in Re a Debtor (No 222 of 1990) ex parte Bank of Ireland[1992] BCLC 137 , at 144E–G. Seventhly, if the chairman's decision is challenged under s 262(1)(b) of the 1986 Act or under r 5.17(5) of the 1986 [Insolvency] Rules, then the court must at the resultant hearing decide the merits of the dispute on the evidence adduced on the application: see National Westminster Bank plc v Scher[1998] BPIR 224 , per John Martin QC, following Re a Company (No 004539 of 1993)[1995] 1 BCLC 459 .”
“[T]he New Primary Debtor [FF] and the Guarantor [Mr Merchant] each agree to pay any remaining unpaid amount of the Assumed Primary Liabilities [defined in recital D] to the Creditor [who or which entered into the standstill agreement] (and therefore release the obligations of the Guarantor) on the Final Date [the earlier of 7 years from the date of the standstill agreement or 5 business days after other defined events].” “[T]he New Primary Debtor [FF] and the Guarantor [Mr Merchant] each agree to pay any remaining unpaid amount of the Assumed Primary Liabilities [defined in recital D] to the Creditor [who or which entered into the standstill agreement] (and therefore release the obligations of the Guarantor) on the Final Date [the earlier of 7 years from the date of the standstill agreement or 5 business days after other defined events].”
“These debts are those included within the standstill agreements. These and other creditors are not implicated or preferred when comparing other listed creditors.”
“Any standstill agreements are simply PG arrangements with a stay of pursuit until a formal arrangement is in place. Any one with or without this agreement will suffer no prejudice. Mr Merchants [sic] obligations fall away upon inception of the IVA where FF will assume responsibility to payback [sic] all creditors with [sic] on a pari passu basis”
“Now I take it to be thoroughly settled, both in Courts of Law and Equity, that where there is a bankruptcy, or an arrangement with creditors by composition or insolvency, when insolvency exists as contradistinguished from bankruptcy, it is the duty of all creditors who have once taken part in the proceedings of bankruptcy or composition to stand to share and share alike. Equality is the only principle that can be applied, and if one creditor, unknown to the other creditors–not unknown to one or two, but to the general body–enters into an arrangement by which he gets for himself from the debtor, or from any one on behalf of the debtor, any collateral advantage whatever, that is a fraud upon the other creditors …”
“It is clear from this formulation of the principle [i.e. the one immediately above] that this is not simply a re-iteration of the rule embodied in all insolvency legislation that the general unsecured creditors should share pari passu in the available assets of the insolvent estate. The principle can be breached if a creditor receives a collateral advantage from a third party in return for entering into the arrangement.”
“In circumstances where the considerations referred to by Etherton LJ at [67] of his judgment in Kapoor [v National Westminster Bank plc[2011] EWCA Civ 1083 ] were very much in issue, the principle of good faith does, I think, require to be strictly applied. The objection to the [Kaupthing Settlement Agreement] is that it provided Kaupthing with a collateral advantage not available to other creditors which placed it in a position of conflict with the interests of the other creditors. That was in my view a breach of the good faith principle which disqualified Kaupthing from voting on the proposal to the potential detriment of CFL and the remaining creditors. I agree with the judge that the good faith principle is not confined to vote buying of the kind exemplified by [Cadbury Schweppes Plc v] Somji nor do I accept that the test of whether the IVA should be revoked on grounds of material irregularity depends on whether disclosure of the arrangement could have made a difference to the outcome in the way that Mr Moss [leading counsel for the appellant] puts it. Somji was not decided under s.262(1) and concerned only whether there was a material omission in the information provided to creditors in the proposal document. In Kapoor where the challenge was brought under s.262(1)(b), it is clear from [64] of the judgment that the vote of the creditor who is party to the collateral arrangement falls to be excluded.”
“The contents set forth herein (the “Information”) are based on the estimates, projections and assumptions of FF Investment Holdco Limited and are subject to change. FF Investment Holdco Limited has prepared the Information based on expectations and assumptions believed to be reasonable under the circumstances, but no representation or warranty, express or implied, is provided in relation to the accuracy, completeness or reliability of the Information. The Information, including the projections, assumptions and calculations in the spreadsheets included in the Information, has not been, nor will it be, independently reviewed, verified or examined, and no person will provide any form of assurance with respect to the Information. The Information is subject to risks and uncertainties that could cause actual results to differ materially from those estimates, projections and assumptions expressed therein, and the Information should be read with caution. The Information is subjective in many respects and thus susceptible to interpretations and periodic revisions based on actual experience and recent developments. Whilst presented with numerical specificity, the Information is based upon a variety of estimates and hypothetical assumptions with respect to, among other things, asset performance, general economic, market, interest rate and financial conditions, operating and other revenues and expenses, capital expenditures and working capital and other matters. None of the assumptions may be realised, and they are inherently subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond our control. Accordingly, there can be no assurance that the assumptions made in preparing the projections will prove accurate, and actual results may materially differ. The Information is for the use only of the party to whom it is addressed and is confidential, by accepting the Information you agree to hold it in complete confidence.”
“An IVA is a means by which an insolvent debtor can escape the full and rigorous consequence of a bankruptcy order, including the right of the creditors to select the trustee in bankruptcy, the supervision of the trustee by the creditors and the court, the ascertainment, collection and distribution of bankruptcy estate by the trustee, and the possibility of holding a public or private examination of the bankrupt on oath. In cases, such as the present, where independent creditors have doubts as to whether the debtor has been full and frank in the information he has provided, and, in particular, as to the full extent of his assets, an IVA has potentially severe disadvantages for those creditors.”