Re T & N Ltd

Rules governing notice of creditors’ meetings for company voluntary arrangements must be read coherently. Notice must be given to every creditor whose claim and address are known, but failure to notify a particular creditor does not automatically invalidate the meeting or the arrangement. It is an irregularity which may support a challenge under section 6 of the Insolvency Act 1986, assessed by reference to matters including the likely effect on the result, the number and value of affected debts, and whether the failure was deliberate.

Rules 12.10 and 12.11 of the Insolvency Rules 1986 apply to notices of meetings, subject to necessary modifications. Rule 12.12, concerning service out of the jurisdiction in court proceedings, does not apply to such notices.

The administrators of T&N Limited and associated companies proposed company voluntary arrangements as part of a wider restructuring involving asbestos-related claims and parallel Chapter 11 proceedings in the United States.

The court was asked to give directions concerning the convening of creditors’ meetings. The principal issues were the creditors who had to receive notice, the effect of failure to send notice, the application of rules governing service by post and service out of the jurisdiction, delivery through solicitors, electronic delivery, and the appropriate notice period.

1. Notice and effect of non-receipt. The administrators had to give written notice to every creditor of whose claim and address they were aware, including creditors identified from the companies’ records and relevant Chapter 11 materials. The amended section 5(2)(b) of the Insolvency Act 1986 binds both creditors who had notice and creditors who would have been entitled to vote if they had received notice.
2. Irregularity does not automatically invalidate the meeting. Rule 12.16 of the Insolvency Rules 1986 raises a presumption that a meeting was duly summoned where notice was properly sent but not received. If notice was not sent to a creditor who should have received it, that is an irregularity for section 6 purposes. It does not, however, automatically invalidate the meeting or prevent the CVA from taking effect. The court should consider the possible effect on the result, the number and value of the affected claims, and whether the omission was wilful.
3. Service rules. Rules 12.10 and 12.11 apply to notices of meetings, read with necessary modifications. They provide a basis for determining when posted notice is deemed served and permit flexibility in methods of delivery, including document exchange, fax and electronic communication where appropriate. Rule 12.12 does not apply because notices of meetings are not court process, and giving notice to foreign creditors does not require permission to serve out of the jurisdiction.
4. Delivery through agents and alternative methods. Under rule 13.4, documents may be sent to a solicitor who has actual authority to accept them. A solicitor’s mistaken assertion of authority would create an irregularity, not automatic invalidity. Delivery by email or fax with the recipient’s prior consent was permissible.
5. Practical directions. Sending documents to authorised solicitors was acceptable, including one set for each firm where further copies could be supplied. For US claimants whose identities were unknown but whose lawyers were known, documents could be sent to the lawyers in accordance with the US court order. At least six weeks’ notice should be given because of the proposals’ complexity. Precise directions were to be settled after hearing counsel.