MacDonald HC Auckland CIV 2010-404-4496

[2010] NZHC 1975

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2010-404-004496

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF     a proposal of MARK STUART MACDONALD

Hearing:         2 November 2010

Counsel:         M G Kirkland and H O'Connor for trustee applicant

A L Bowater for Westpac Banking Corporation, a creditor in support

Judgment:      2 November 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE ABBOTT

Solicitors:

Kirkland Enright, PO Box 1290, Auckland 1140 for trustee applicant

Simpson Grierson, Private Bag 92518, Auckland 1141 for Westpac Banking Corporation

MCDONALD HC AK CIV 2010-404-004496  2 November 2010

[1]      Gareth Hoole, chartered accountant and insolvency practitioner, has applied for approval of a proposal made by Mark Stuart MacDonald to his creditors.

[2]      Mr  Hoole  was  appointed  trustee  for  the  creditors  at  a  meeting  held  on

12 August 2009.  The proposal was accepted at the meeting by the required majority of creditors.  The trustee now applies pursuant to s 333 of the Insolvency Act 2006 for  its  approval.    The  application  is  supported  by a  report  of  the  trustee  dated

24 September 2010, in which he advises the Court that:

a)       Notice of the proposal, and of the creditors’ meeting to consider it (supported by the requisite documents) was given to every known creditor affected by it;

b)The proposal was accepted by resolution passed at the meeting by the requisite number and value of creditors;

c)       One  postal  vote  and  proof  of  debt  was  received  late  and  was disallowed;

d)A modified proposal was put to the creditors after the meeting (to take into account a claim by four creditors to a set-off against an asset identified in the proposal), and was accepted unanimously by all creditors, including the creditor whose vote was disallowed at the meeting.

[3]      A copy of the trustee’s report on the proposal (including modification) and the meeting, and notice of today’s hearing of the application, were sent to all known creditors on 11 October 2010 and to the insolvent on 15 October 2010.

[4]      The essence of the proposal is that Mr MacDonald will make payments to the trustee over the next three years which will be applied by the trustee in payment to creditors in proportion to proved debts:

a)       He is to pay the sum of $5,578.43 per annum for the next three years to be applied towards the debts to secured creditors.

b)He is to pay a cash sum of $30,000 immediately on approval of the proposal, together with a further $24,714.57 per annum over the next three years to be applied towards the debts to unsecured creditors.

[5]      The proposal also includes what is described as a “windfall clause” under which Mr MacDonald has agreed that if he should receive any money that is not currently foreseen, in the nature of a windfall receipt, that money will also be paid to the trustee and applied towards creditors.

[6]      The period of the proposal is equal to the period of bankruptcy (three years). The trustee expresses the view that the advantage of the proposal over bankruptcy is that it will allow Mr MacDonald to keep his job and earn the annual dividend to be paid to creditors (that is of course in addition to the capital sum which is to be paid immediately).

[7]      The trustee has also expressed the view that the proposal is advantageous to creditors for the following reasons:

a)       Payment of the $30,000 capital is to be made immediately and the trustee’s fees will also be paid immediately.

b)There  is  no  evidence  that  Mr  MacDonald  lives  an  extravagant lifestyle.   He lives in a rented flat and does not have assets of any significant value.   He has not been on any extravagant holidays or indulged in any other forms of inappropriate conduct.

c)       There is no evidence that Mr MacDonald has hidden any assets from creditors.  The trustee accepts that Mr MacDonald has fully disclosed his financial position to creditors and they have made a commercial judgment regarding the proposal.

d)There  is  no  evidence  that  Mr  MacDonald  has  been  financially reckless, or deliberately or wilfully squandered assets.

[8]      It  is  also  significant  that  no  creditor  has  objected  to  the  Court  granting approval (indeed, Westpac appears today in support of the application).

[9]      I am satisfied that:

a)       The statutory provisions in relation to proposals under sub part 2 of part 5 of the Insolvency Act 2006 have been complied with.

b)The proposal has been accepted by the requisite number and value of creditors.

c)       The  terms  of  this  proposal  are  reasonable,  and  are  calculated  to benefit the general body of creditors.

d)       There is no reason to consider it inexpedient to approve the proposal.

e)       The proposal has made proper provision for prior payment of the trustees’ fees and expenses, and the costs of the creditors’ meeting as required by s 333(4) of the Insolvency Act 2006.

[10]     I make an order as sought in the trustee’s application dated 24 September

2010.

Associate Judge Abbott