ARSEN KARAPETIAN & ANOR. v RONAN ANTHONY DUFFY

At an IVA creditors’ decision procedure, the creditor must put forward and substantiate the debt relied on for voting purposes. The chair must consider the claim and supporting evidence, but is not required to investigate it or assume a debt from incomplete documents. A doubtful claim should be admitted and marked as objected to; an unliquidated or unascertained claim is ordinarily valued at £1 unless a higher minimum value can safely be assigned.

An appeal under the Insolvency (England and Wales) Rules 2016 requires the court to decide the issue afresh. A procedural irregularity is material only if it materially affected the decision. An incorrect meeting time did not do so where the creditor had adequate notice and failed independently to provide sufficient details of the debt.

A creditor appealed under rule 15.35 of the Insolvency (England and Wales) Rules 2016 against the rejection of an individual voluntary arrangement. The creditor contended that the nominee had wrongly admitted only a £500,000 loan debt and had failed to admit a further claim of €1,283,847 said to arise under a personal guarantee.

He also relied on an email giving the meeting time incorrectly in Russian and alleged that the nominee failed to consider documents sent shortly before the meeting. The central issues were whether the further debt was established for voting purposes and whether the conduct of the meeting involved a material irregularity justifying reversal, variation or a new decision procedure.

1. The application was dismissed. There was no basis to reverse or vary the creditors’ decision or to order a new meeting.
2. Under sections 257 and 262 of the Insolvency Act 1986, and rules 15.31 and 15.33 of the Insolvency (England and Wales) Rules 2016, the creditor bears the legal burden of proving the debt on the balance of probabilities. The chair must consider the claim and evidence supplied. A plainly good claim is admitted, a plainly bad claim rejected, and a doubtful claim admitted subject to objection. The chair is not required to investigate the claim.
3. The court’s jurisdiction under rule 15.35 is not confined to reviewing the chair’s decision. It must form its own view on the evidence and arguments. The materiality requirement nevertheless remains: an irregularity must have materially affected the decision.
4. The personal guarantee did not establish a debt payable to the applicant. On its ordinary construction, it promised payment of the debt owed by TGR to AutoSale. A promise to pay a debt owed to a third party ordinarily requires payment to that third party unless the agreement clearly provides otherwise. The alleged consideration was either unrelated to the guarantee or insufficiently evidenced.
5. The applicant had not supplied a sufficiently particularised claim, proof of debt or supporting evidence before the meeting. The reconciliation document did not establish the claimed liability. Even if the incorrect meeting time was an irregularity, it was not material: the applicant knew the date, had time to prepare his claim, and his failure to provide adequate details, rather than the time error, caused the debt not to be admitted.

First-instance decision. The judgment records no prior appellate decision.