Stevenson - [2015] NZHC 2528

IN THE HIGH COURTOF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2015-409-000438 [2015] NZHC 2528

IN THE MATTER OF
Part 5, Subpart 2 of the Insolvency Act

2006

AND IN THE MATTER

of an application for approval of the proposal of ANDREW VINCENT STEVENSON, an insolvent

Appearances: C R Vinnell for Insolvent

Judgment:

14 October 2015

ORAL JUDGMENT OF ASSOCIATE JUDGE OSBORNE

[1] The insolvent seeks approval of a proposal under Part 5 of the Insolvency Act

2006.

[2] The insolvent lodged his proposal on 3 July 2015. Through his trustee, Andrew Marchel Oorschot, he then followed the procedure for putting that proposal by notice to all his creditors, together with all the information required under the Insolvency Act. A meeting of creditors was subsequently convened on 14 July 2015 and resumed on 27 July 2015, when the required majorities of creditors (ie a majority in number and a three quarters majority in value) accepted the proposal. The specific numbers, as disclosed by Mr Oorschot’s report, were that seven creditors who attended the meeting voted in favour of the proposal and three voted against. In dollar terms a figure of $177,360.79 (81 percent) represented the
majority, and a figure of $42,048.52 (19 percent) represented those voting against.

Re A V Stevenson [2015] NZHC 2528 [14 October 2015]

The proposal itself

[3] The proposal was that each creditor receive an initial payment of $500 and thereafter 16.6 percent of the balance of their debt. It was that proposal which was accepted by the majorities to which I have referred. The background which is obviously well understood by the creditors involved is that Mr Stevenson was associated with a company, K Fowler Homes (Nelson) Limited, which had become insolvent. Mr Stevenson had personally guaranteed company debts. He is currently employed as a manager for a building firm. He is married with three children, two of whom are living at home and are dependents. He and his wife have some furniture and personal effects but no real property. Through this insolvency proposal which is interdependent with a proposal put by the company to its creditors (under Part 14 of the Companies Act 1993) Mr Stevenson seeks to avoid bankruptcy. The funds for Mr Stevenson’s proposal and the company’s proposal come from a relative. Undoubtedly, the creditors took those matters into account when voting as they did.

My approach to the approval of the proposal

[4] Section 327 of the Insolvency Act 2006 requires a proposal to satisfy an insolvent’s debts to be in the prescribed form and to be accompanied by a statement of affairs in the prescribed form. I am satisfied that that was done. Under s 330 the person appointed provisional trustee had to call the meeting of creditors as I have referred to, and I am satisfied that the provisions of both ss 330 and 331 were met. These are:

330 Provisional trustee must call meeting of creditors

(1) The provisional trustee must, as soon as practicable after the proposal is filed, call…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2015] NZHC 2528
Decision Date: 14 October 2015

CaseChat Overview and Summary

In the matter of Re Andrew Vincent Stevenson, an insolvent, Associate Judge Osborne was tasked with determining whether to approve a proposal made by the insolvent to his creditors. The proposal was to provide an initial payment of $500 to each creditor, followed by 16.6 percent of the remaining debt. This proposal was lodged on 3 July 2015 and accepted by the requisite majorities at a creditors' meeting on 27 July 2015. The insolvent, who was associated with an insolvent company and had personally guaranteed its debts, sought to avoid bankruptcy through this proposal. The primary legal issue was whether the proposal met the statutory requirements for approval and was reasonable and expedient.

The court examined whether the statutory procedures had been followed, which they had. The insolvent filed the proposal and the trustee called a meeting of creditors, providing the necessary information and allowing creditors to vote. The creditors accepted the proposal with the necessary majorities in number and value. The court then considered whether the terms of the proposal were reasonable and whether it was expedient to approve it. The court found that the proposal had no downside for the creditors and was reasonable and appropriate. Given the limited discretion of the court in approving such proposals, the court approved the proposal, finding no grounds for refusal under section 333 of the Insolvency Act 2006. The application for approval was granted, and the insolvent's proposal was approved.

Orders