North Point Global Ltd, Re

A contingent preference claim may fall within a company voluntary arrangement even where the office-holder who can pursue it has not yet been appointed. The claim is capable of being a contingent debt and, where the statutory requirements are met, a provable debt.

For Insolvency Act 1986 s 5(2)(b)(ii), the relevant question is whether the creditor, considered in the capacity in which the claim is held, would have been entitled to vote if given notice. The inquiry is not confined to whether the individual office-holder held office on the approval date.

Where a CVA incorporates insolvency rules concerning proof and valuation, the creditor’s entitlement to prove is distinct from the valuation of the claim. The valuation should ordinarily be undertaken by the supervisor, subject to appeal.

North Point Global Limited entered into a company voluntary arrangement under Part I of the Insolvency Act 1986. Baltic House Developments Limited, a subsidiary, was later wound up and its joint liquidators advanced a statutory preference claim against North Point.

The supervisor rejected the claim on the basis that the liquidators were not in office when the CVA was approved and therefore were not bound by it. He also disputed their entitlement to prove and had not valued the claim.

The court had to determine whether the liquidators were bound by the CVA, whether they could prove as contingent creditors, and whether valuation should be undertaken by the court or remitted to the supervisor.

1. Declaration and remission. The applicants were contingent creditors bound by the CVA and entitled to prove. The question of value was remitted to the supervisor.
2. Nature of the claim. A statutory preference claim is vested in the office-holder personally in that capacity, rather than in the company whose liquidator the office-holder is. The claim was nevertheless a contingent debt and was provable in a formal insolvency. The court relied on In Re T&N Limited [2005] EWHC 2870 (Ch), [2006] 1 WLR 1728, and Hellard v Chadwick [2014] EWHC 2158 (Ch), [2014] BPIR 1234.
3. Contingency and provability. The fact that the remedy depended partly on the court’s discretion, or that no person was yet able to pursue the claim at the relevant date, did not prevent the claim from being provable. Applying the approach in Re Nortel GmbH [2013] UKSC 52, [2014] AC 209, Baltic House had entered a legal relationship with North Point, was within the relevant preference regime, and the statutory and insolvency context supported treating the claim as falling within the CVA.
4. Construction of s 5(2). Section 5(2)(b)(ii) focuses on the creditor in the capacity in which the claim is held. The question is whether the liquidators would have been entitled to vote if they had then held that capacity and had received notice. This construction promoted the policy that contingent claims should, where possible, be brought within the CVA regime.
5. Entitlement to prove and valuation. The CVA’s provision fixing the valuation date dealt with valuation, not the existence of a creditor’s claim. The incorporated insolvency rules permitted contingent claims to be proved. Valuation was ordinarily for the supervisor, with a right of appeal, and there was no sufficient reason to depart from that procedure.

First-instance decision. No earlier judgment in the same proceedings is stated.