England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY

		Birmingham Civil Justice Centre, 33, Bull Street, BIRMINGHAM B4 6DS.
		17th June 2013

JUDGE PURLE QC:

1. This is an appeal from the decision of District Judge Musgrave of 31^st August 2012, adjudging the Appellant bankrupt.
2. At the same hearing, the Appellant applied for orders setting aside various decisions made by the First Respondent, Mr Dymond, as chairman of a creditors' meeting convened for 29^th March 2012 to consider a proposed individual voluntary arrangement ("IVA") for the Appellant. Included in those decisions was the admission to voting of the Second Respondent ("the Bank") in the sum of £2,938,211.67. The District Judge refused to set aside that decision, which is also appealed to me. The result of that refusal was that the IVA proposal was defeated. It is said by the Appellant that the debt should have been admitted to voting for a much smaller amount. The Appellant was also challenging other voting decisions of Mr Dymond. Had he succeeded in those challenges, the result would have been that the proposed IVA was approved, and the bankruptcy order ought, it is said, not to have been made.
3. The District Judge considered the Bank's debt first. As he dismissed the challenge to Mr Dymond's decision on this point, that was fatal to the proposed IVA and the bankruptcy appeal. He did not therefore need to consider the other disputed decisions. Likewise, on this appeal, I am asked only to consider the correctness of the District Judge's ruling on the challenge to the Bank's debt. If the appeal is allowed, the matter will have to go back to a district judge to reconsider the issue on fuller evidence, and to adjudicate upon the other disputed voting decisions. In essence, the complaint is that the District Judge was wrong to decide the issue against the Appellant summarily.
4. The Bank is a secured creditor of the Appellant, owed in round figures £3.4 million. The Bank on 1^st June 2011 served a statutory demand, valuing its security (a property at Trewent in Pembroke) at £350,000. The statutory demand related to the balance. The Bank also valued its security at £350,000 on its bankruptcy petition presented on 18^th August 2011, petitioning for the balance. That figure coincided with a settlement agreement between the Appellant and the Bank dated 12^th April 2011, which provided that upon payment of £350,000 the Bank would release its security on Trewent. That £350,000 never was, in fact, paid.
5. It should be noted that the IVA was not within the contemplation of the Bank at any of the dates of the settlement agreement, statutory demand or petition. It cannot be said, therefore, that the Bank's valuation of its security was fastened upon with one eye upon the voting consequences as regards the IVA.
6. The Bank also had a valuation from a Fellow of the Royal Institution of Chartered Surveyors (Mr Ormond of Guy Thomas & Co of Pembroke) received in November 2010 (erroneously dated 2011). This valued Trewent at £650,000 to £700,000. This was an open market, not a forced sale, valuation. The Bank held a first charge for £350,000. Another secured creditor (HSBC) had priority for the next £250,000 under a Deed of Priority. The Bank's charge then secured the remainder of the Bank's debt. The Bank took the view that, after the costs of realisation (including LPA receivers' and litigation costs) it would recover no more than £350,000, as the costs exceeded (or would exceed) £100,000. Hence the value placed on its security, both for the purpose of the statutory demand and the petition. The Bank's evidence before the District Judge was that the LPA receivers did not expect there to be a significant difference in the sale price at that later time (June 2012). The relevant date for valuing the unsecured element of the Bank's claim for the purpose of voting on the IVA was the date of the interim order made under Part VIII of the Insolvency Act 1986: rule 5.21(2)(a) of the Insolvency Rules 1986. That date was 7^th February 2012. There is no suggestion that the value was significantly different then, compared with June 2012.
7. The Appellant had himself (in November 2011) valued Trewent in his IVA proposal at £675,000, which was in line with the Bank's valuation, though this was said to be the forced sale value. If correct, this would not (on the Bank's case) increase the estimate of the Bank's unsecured indebtedness, as the costs of realisation exceeded £100,000, though the Appellant's estimate of realisation costs at that stage was only £20,250.
8. In a revised IVA proposal, the Appellant in February 2012 placed a forced sale valuation on Trewent of £900,000, with estimated realisation costs of £27,000. The sudden increase in the valuation was unexplained.
9. By a letter ("the FBM letter") dated 3^rd March 2012, a firm of estate agents called FBM provided a Mr M De Graf with a proposal to market a property in Trewent (which I assume is the same as that secured by the Appellant to the Bank, as it has the same postcode). The proposal was signed by Ryan Lawrence, said to be a Senior Negotiator. He does not profess to have any professional qualifications. The proposal was to market Trewent at a marketing price of £850,000. This was expressed to be "a guide for marketing purposes only. Your legal and financial advisers should not rely on this advice". There was no reasoned basis for the marketing price. The rest of the letter consisted largely of reasons for instructing FMB, who were evidently keen to get the property on their books. Clearly, the FBM letter carried no weight as a valuation.
10. In his witness statements before the District Judge, the Appellant did not refer to the FBM letter, though he obviously had it, and the District Judge commented (as was common ground before me) that the Chairman of the 29^th March meeting knew about it. The Appellant did, however, comment upon the Bank's valuation. He also suggested in his witness statement of 2^nd August 2012 that up to date valuation evidence would be needed, along with expert evidence as to what he described as "proposed costs of sale" advanced by a Ms Foster of the Bank. Strictly speaking, up to date valuation evidence would be irrelevant, as the relevant date was 7^th February 2012. The Appellant at that stage chose to put in no independent evidence of value at that, or any other, date.
11. It is important to note the directions that had been given, which led to the witness statement of 2^nd August 2012. On 25^th May 2012 the District Judge ordered by consent that (in summary) the Bank be added as a party, Mr Dymond serve his evidence by 22^nd June 2012, the Bank serve its evidence by 29^th June 2012, and the Appellant serve any evidence in reply by 27^th July 2012. This timetable was followed with some slippage and resulted in the Appellant's witness statement of 2^nd August 2012.
12. The Appellant had made 2 previous witness statements preceding the May directions. The first was dated 7^th February 2012 and was made in support of the proposed IVA. The second was dated 26^th April 2012, made in support of the appeal against Mr Dymond's voting decisions, which incorporated the first witness statement with two small amendments. One amendment arose out of valuations he gave in paragraphs 26 and 31 of his first witness statement. Neither of those paragraphs related to the Trewent valuation, though the Appellant did proceed in his second witness statement to address in general terms the alleged overvaluation of the Bank's debt, saying (by reference to calculations that his legal advisers had produced) in paragraph 7.3 that the Bank's vote should have been admitted in the lower sum of £2,715,211.60. Later on, in paragraph 15, he espoused a figure of £2,670,634.91. The difference between the two sides on these figures was, therefore, £268,096.76. (£2,938,211.67 - £2,670,634.91). However, these figures were based on the valuations given in the revised IVA proposal, adjusted in line with the FBM letter, which recommended marketing Trewent at £850,000. This adjustment appears to have been explained by Mr Dymond at the creditors' meeting, though the FBM letter was not circulated.
13. The Bank's evidence in reply was given by Ms Foster, who produced Mr Ormond's valuation report, which she noted had been sent to the Appellant's solicitors in the past, and, as already mentioned, recorded that the LPA receivers did not expect there to be a significant difference in price at the date of her witness statement. She also highlighted the Appellant's own valuation at the time of the original IVA proposal. The assumption that the property was worth £850,000 was "not admitted" for the reasons set out in the witness statement. She noted from the appellant's witness statement that there was reference to a recent valuation of £850,000 at the creditors' meeting. Clearly, she had not seen it, and was not accepting it.
14. She went on to justify in detail why the Appellant's estimate of costs could not stand. There were receivership remuneration, costs and expenses due to the receivers under the express terms of the Bank's charge, as well as the Bank's own costs and expenses. It was doubtful whether even HSBC's debt would be paid in full, leaving nothing over the first £350,000 of the sale proceeds for the Bank.
15. The purpose of this evidence was to enable the District Judge to determine whether or not the appeal should continue to a fully contested hearing with cross-examination, expert evidence and the like. Paragraph 6 of the District Judge's order of 25^th May 2012 provided as follows:

"The Application be listed for a Case Management Conference on Friday 31^st August 2012 at 11:00am (time estimate of 4 hours) with a view to determining whether the Application should be allowed to proceed at all. Reserved to District Judge Musgrave."

16. "The Application" referred to in paragraph 6 was the appeal against Mr Dymond's voting decisions. The clear intent behind that paragraph was to allow the District Judge, if appropriate to do so, to consider whether there was a challenge worthy of the name. Had a serious issue on the Bank's valuation been shown – for example, by production of proper valuation evidence the other way – the District Judge may (depending upon the answer to other points taken before him) have had to give directions for a more formal resolution of the issues. As it happens, no formal valuation evidence was put in before the District Judge, though the FBM letter was produced at the hearing.
17. As the matter came before the District Judge in the context of an application to appeal Mr Dymond's voting decisions, I need to consider the applicable legal test for success on such an appeal. The application before the District Judge was expressed to be pursuant to Rule 5.17 of the Insolvency Rules 1986 ("the Rules"). This was an erroneous reference to the rules previously in force until their substitution by the Insolvency (Amendment) (No 2) Rules 2002. The correct reference is to Rule 5.22(3), though there is also reference to an appeal in Rule 5.23(7).
18. Rule 5.21 of the Rules materially provides as follows:-

"5.21  Entitlement to vote

(1)     Subject as follows, every creditor who has notice of the creditors' meeting is entitled to vote at the meeting or any adjournment of it.

(2)     A creditor's entitlement to vote is calculated as follows—

(a)    where the debtor is not an undischarged bankrupt and an interim order is in force, by reference to the amount of the debt owed to him as at the date of the interim order…"

19. Rule 5.22 materially provides as follows:

"5.22   Procedure for admission of creditors' claims for voting purposes

(1)     Subject as follows, at the 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 5.21 is subject to appeal to the court by any creditor or by the debtor.

(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…"

20. Rule 5.23 materially provides as follows:

"5.23   Requisite majorities

(1)     Subject to paragraph (2), at the creditors' meeting, a resolution is passed when a majority (in value) of those present and voting in person or by proxy have voted in favour of it.

(2)     A resolution to approve the proposal or a modification is passed when a majority of three-quarters or more (in value) of those present and voting in person or by proxy have voted in favour of it.

(3)     In the following cases there is to be left out of account a creditor's vote in respect of any claim or part of a claim—

…

(b)     where the claim or part is secured;

…

(7)     The chairman's decision on any matter under this Rule is subject to appeal to the court by any creditor or by the debtor and paragraphs (5) to (7) of Rule 5.22 apply as regards such an appeal."

21. It is a feature of the appeal process enshrined in Rules 5.22(3) and 5.23(7) that an appeal may succeed even though the Chairman acted impeccably: Power v Petrus Estates Ltd [2010] BCC 11. Decisions have to be taken quickly and pragmatically at creditors' meetings. The appeal process allows the Court to consider the outstanding issues in a more measured way, with all interested parties having the possibility of adducing evidence, something which is rarely if ever possible in a creditors' meeting. That is what the District Judge sought to achieve in this case by his directions order of 25^th May 2012.
22. The test on an appeal against a voting decision is whether the challenged indebtedness is, on balance, owed. The legal burden must, in my judgment, be on the creditor (in the case the Bank) to establish the claimed indebtedness. Where the creditor has made a bona fide assessment of the unsecured element of a debt based on a respectable professional valuation, the evidential burden shifts to the debtor, though the legal burden remains on the creditor throughout. Once, therefore, the debtor puts in respectable evidence the other way, the question the court must ask is whether the creditor has on balance satisfied the court that the unsecured element of its debt is established in the amount claimed.
23. In the present case, Mr Dymond marked the unsecured part of the Bank's claim as objected to but allowed the votes to be cast in the amount claimed by the Bank, as provided by Rule 5.22(4). There is no doubt that this was an appropriate procedure, as Mr Dymond was in no position to value Trewent himself. The Appellant was asserting that Trewent was more valuable than the Bank said it was and that, in consequence, the Bank's unsecured claim was overstated.
24. Mr Tedd QC for the Appellant placed reliance before me upon the fact that the claim was marked as objected to. This of itself demonstrated, he argued, that there was a real issue to be tried as to the true level of unsecured indebtedness, requiring directions for expert evidence. I do not agree that this consequence follows. The position fell to be decided upon the evidence before the District Judge, who had to make up his own mind whether there was, on that evidence, a real issue to be tried.
25. One particular criticism is made of the approach adopted by Mr Dymond at the creditors' meeting of 29^th March 2012. In admitting the Bank's vote in the amount claimed, Mr Dymond treated the Bank as having abandoned its security over £350,000. This was incorrect. The Bank never abandoned its security but valued it as having no greater value than £350,000. If, in the event, the security should realise more, the Bank would be entitled to priority after discharge of the £250,000 due to HSBC. The real issue, therefore, before the District Judge was whether or not the Bank had established that its security was correctly valued at no more than £350,000.
26. As the Appellant, by his witness statement of 2^nd August 2012, put in no valuation evidence, rather than commenting upon Mr Ormond's, he faced an uphill struggle (to say the least) unless those comments were so compelling as to demand the conclusion that there was a real issue to be tried. His comments were not in my judgment of that order. They were, in essence, that this was a November 2010 valuation, which was far from definitive. Mr Ormond revealed in his report that there had only been a single inspection. He also acknowledged a lack of comparables and that Trewent was difficult to value accurately. None of that demonstrates that the valuation was wrong. It was moreover an open market, not a forced sale, valuation. Mr Tedd QC accepted before me that Trewent's value should be ascertained on a forced sale basis. As everyone knows, a forced sale may result in a significantly lower price. There is no evidence suggesting that prices rose in Pembroke over the period November 2010 to February 2012, and there is no longer (far from it) an assumption that property prices rise remorselessly.
27. In those circumstances, it seems to me that the Bank was entitled to continue to rely on the valuation it had. As the same figure (£350,000) was also chosen by the parties in an arms' length transaction as the price for the release under the April 2011 settlement agreement, and was in line with the Appellant's own initial valuation for the purpose of the IVA, there was a real practical onus on the Appellant to disturb that valuation by proper evidence. The FBM letter was manifestly inadequate for that purpose, as the District Judge rightly recognised.
28. Before the District Judge, the Bank also argued that, in the absence of bad faith, the valuation they put on their security could not be challenged. The District Judge accepted that argument. Before me, the Bank ultimately abandoned the point in the light of authorities (not cited to the District Judge) indicating (albeit in a slightly different context) the opposite: Platts v Western Trust and Savings Ltd [1996] BPIR 339; Owo-Samson v Barclays Bank Plc (No 1) [2003] BPIR 1373. Mr Tedd QC submitted that this fatally undermined the District Judge's decision. I do not agree. Had that been the only basis for the District Judge's decision, Mr Tedd's point would have validity. However, the District Judge went on to consider the evidence and concluded that the Bank's valuation was correct. Looking at the matter afresh, I agree with that conclusion.
29. Separate points were also taken by the Appellant as to the correct figure to take into account for expenses. It was said that a number of receivership and other expenses have to be ignored as they are merely contingent. This point was not taken before the District Judge, though the Bank did not object to the point being taken before me so long as they were allowed to put in evidence on the point. That evidence demonstrated that a large number of the expenses were incurred before February 7^th 2012. It was also said that a number of expenses which the bank provided for were included in the primary indebtedness on the proper construction of the settlement agreement of 12^th April 2011. This was objected to as the Bank had no prior warning of the point and had not addressed the issue in evidence.
30. In my judgment, none of this ultimately matters.
31. Taking the value of Trewent as £700,000 (the higher end of Mr Ormond's range) results in a balance (before expenses) of £450,000 (£100,000 more than the Bank's figure of £350,000) after allowing for the HSBC secured indebtedness. The Appellant accepted that an irreducible minimum of approximately £20,000 as expenses should be taken into account. Thus, there is scope for reducing the Bank's unsecured indebtedness by (at most) approximately £80,000 (£100,000 - £20,000). If that reduction had been made in full, the remaining unsecured indebtedness would not (without costs and interest being taken into account) have been enough to defeat the IVA. It would have been enough to defeat the IVA on a valuation of £650,000, or if disputed costs and interests of up to £50,000 were taken into account. The disputed costs and interest are much higher than that. I annex to this judgment calculations demonstrating the different effect on the voting of valuations of £650,000 and £700,000 respectively (before disputed costs and continuing interest are taken into account). Obviously, if the disputed costs and continuing interest are taken into account, the position is comfortably in the Bank's favour, even from a starting point of £700,000. Given that the parties accept that the appropriate basis of valuation is a forced sale, it is difficult to justify that starting point, and even £650,000 may be too high.
32. The Bank's evidence demonstrated that there were substantial historical costs, including litigation costs, well in excess of £50,000, by February 7^th 2012, which were in no sense a future or contingent liability, but which were charged against Trewent and fell to be recouped from the proceeds of sale, when sold. As with the case of irreducible costs which the Appellant concedes must be taken into account, those historical costs (whatever the position concerning future costs) must be taken into account in valuing the security.
33. In addition, I would not regard it as appropriate to ignore even future anticipated costs on the grounds that they are not provable, though past costs are on the facts sufficient to tip the voting balance comfortably in the Bank's favour, even on a £700,000 valuation. To the extent that costs are bound to be incurred, they must be taken into account in valuing the Bank's security, as the Appellant's own estimate of irreducible costs recognises. I would accept that the court should not proceed on the basis that exceptional or unusual costs will be incurred but where, as here, receivers are in place, the ongoing costs associated with their appointment are inevitable, and cannot be ignored. The contrary suggestion in Owo-Samson (above) at [56] and [57] that realisation costs are ignored must be limited to the context of a dispute as to whether or not the creditor is fully secured arising at the stage of the statutory demand or petition, and does not apply in the present context of an appeal from the admission of the Bank's vote on an IVA proposal. In any event, Owo-Samson was a case concerning future costs of opposed enforcement, which were not inevitable, and the remarks on inevitable future costs were obiter, and derive no support in my judgment from anything said by Sir Christopher Slade in Platts. Costs which must inevitably be incurred before or in the realisation of the security must, it seems to me, be taken into account in ascertaining the unsecured balance, as the value of the security (from which the costs will be paid) is necessarily reduced by the amount of those future costs.
34. That leaves the Appellant's new point, namely that a large number of litigation costs are within the primary indebtedness. That depends on the construction of clause 2.8 of the settlement agreement of 12^th April 2011. As mentioned, Mr Cawson QC objected to this point, as it was not taken below and the Bank had no or no sufficient prior warning.
35. Clause 2.8 only applied upon payment of the sum of £350,000 in discharge of the Trewent security. In that event, it was agreed that existing proceedings in Birmingham should be dismissed with no order as to costs. As that sum was never paid, the proceedings have not been dismissed. On the contrary, a further costs order was made in those proceedings in the Bank's favour on 1^st November 2011. Clause 2.8 concluded by saying, supposedly for the avoidance of doubt, that the costs and expenses incurred by the Bank and the Receivers in connection with the proceedings should be borne by the Appellant and were included within the debt (being the primary debt of approximately £3.4 million acknowledged in clause 2.1). Construed alone, that suggests that even if the £350,000 were not to be paid, the costs have been rolled up in the debt. Given the newness of the point before me, no-one addressed evidence as to whether this was or was not the case.
36. In my judgment it would not be right to allow the new point to be taken. On the assumption that (which appears at first blush to be the case but which the evidence of the factual matrix does not address) the settlement agreement bears the meaning attributed to it by the Appellant, that raises the question: what were the costs included within the debt? As the point was not taken before, the Bank's evidence has not been specifically prepared on the basis of separating any costs rolled up within the debt from other, presumably later, costs, or from demonstrating that some other recoverable costs are not included in the debt.
37. Apart from litigation costs, there are undisputable past costs (unrelated to litigation) of at least £20,389.98 (Ms Foster's witness statement of 28^th February 2013). There are also £10,000 litigation costs ordered to be paid on account by the Appellant on 1^st November 2011. These clearly cannot be within the April 2011 settlement as the order post-dates the settlement by several months. There are likely to be other costs, especially as this was merely a payment on account. In addition, there is continuing interest (at 1.5%) to 7^th February 2012 to be taken into account, which appears to have exceeded £20,000 since the petition date on the Bank's calculations attached to their solicitors' letter of 14^th March 2012. In the circumstances, the appellant has not satisfied me that he would be in any better position if now allowed to take this point, especially as the correct starting point for a forced sale valuation is likely to be not £700,000, but £650,000 at most. In addition, the Bank would be prejudiced, as they have not had opportunity to address the point in evidence. I would, if necessary, go further. The Appellant has not satisfied me that any of the disputed costs are, in the circumstances, to be disallowed, as the evidence of what the costs were in April 2011, and the precise relationship they bore to the acknowledged indebtedness in the April settlement agreement, is non-existent through no fault of the Bank.
38. In the result, the appeal is dismissed.

POSTSCRIPT

39. In my original draft judgment, I made an arithmetical error and stated that if (in the case of a £700,000 valuation) a reduction of £80,000 had been made in full, the remaining unsecured indebtedness would still have been enough to defeat the IVA. This was wrong (leaving aside disputed costs and continuing interest) as the attached calculation shows. The arithmetical error I made meant that I did not need to consider the validity of the parties' submissions on costs and expenses, or the question of interest, or whether £700,000 was the correct starting point, and I did not do so. I noticed and drew this error to the attention of the parties after circulation of the original draft, and stated my intention both to correct it, and address the remaining issues. I also indicated that the result was unaffected for reasons which I summarised. I invited written submissions in case of objection, and drew the parties' attention to Re L and B (Children) [2013] UKSC 8, which provisionally seemed to me to justify the course I was proposing. Subsequently, I drew the parties' attention also to the judgement of Mummery LJ in Space Airconditioning Plc v Guy [2013] 1 WLR 1293, paragraphs [53] and [61] in particular.
40. Both parties accept that I have jurisdiction to correct my judgment. Mr Cawson QC for the Bank says that I do not need to do so, as I have not made a mistake on the facts, properly understood. However, I think I did make an arithmetical error, which I ought to correct, and that I should in consequence address issues not previously addressed, as they did not previously seem to me to matter.
41. Mr Couser for the Appellant (with Mr Tedd QC's agreement) says that I should not exercise my jurisdiction to correct the judgment as this would be unfair to the Appellant, especially as the bankruptcy jurisdiction is (he says) draconian requiring especial caution. In those circumstances, I should leave it to the Court of Appeal to correct my error, having the consequence (according to him) that the IVA will prevail over bankruptcy. The problem with this submission is that it does not follow, if I leave my judgment uncorrected, that the Court of Appeal will substitute an IVA for bankruptcy. If that did follow, then I should change the result, rather than forcing the parties to go to the Court of Appeal. As it happens, the Court of Appeal would on Mr Couser's approach have to address the issues I did not originally address (because I thought they did not matter) and decide those issues or remit them back to me or some other Judge for further consideration. That would be a pointless waste of court resources, and of the parties' time and money, given that I can address those issues now. In the circumstances, the overwhelmingly convenient course is for me to correct the judgment and consider the previously unconsidered issues, so far as necessary. That, therefore, is what I have done. I should add that Mr Couser contended (but I do not accept) that the additional issues were of such complexity that I should not consider them at all.
ANNEXE

Arithmetical calculations

Starting point: paragraphs 15 and 17 of the Appellant's witness statement of 26^th April 2012.

This assumed a Trewent valuation of £850,000 less the costs of sale of £27,000.

The votes cast for the IVA proposal according to paragraph 17 were £10,124,679.69.

Example A (below) assumes instead a valuation of £700,000 less the (undisputed) costs of sale of approximately £20,000.

Example B (below) assumes instead a valuation of £650,000 less the (undisputed) costs of sale of approximately £20,000.

Example A

Bank debt:

£3,403,177.38 (at petition date) LESS £350,000 LESS equity balance (£100,000-£20.000 = £80,000) LESS £159,542.39 (realisations) = £2,813,634.91

Voting totals (paragraph 17 of witness statement) become £13,452,197.10

42. of that = £10,089,148. The votes cast in favour (above) were therefore sufficient to approve the IVA if disputed costs, and interest from the petition date, are ignored

Example B

Bank debt:

£3,403,177.38 (at petition date) LESS £350,000 LESS equity balance (£50,000-£20.000 = £30,000) LESS £159,542.39 (realisations) = £2,763,634.91

Voting totals (paragraph 17 of witness statement) become £13,502,197.10

43. of that = £10,126,648. Even ignoring costs and interest from the petition date, which would have the effect of increasing the Bank's debt, the IVA proposal is defeated, as the votes in favour (above) were less than this.