Jurisdiction(s):
United Kingdom

Re Mizen Design/Build Ltd: CVA successfully challenged for material irregularity and unfair prejudice over inadequate disclosure and treatment of guarantee creditors (England and Wales)

Published on: 28 February 2023

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Re Mizen Design/Build Ltd (in company voluntary arrangement); Newlon Housing Trust v Mizen Design/Build Ltd [2023] EWHC 127 (Ch)

What are the practical implications of this case?

In this matter, two creditors from different classes challenged the CVA, with one objection succeeding and the other failing, and they had adopted contrasting positions at the creditors’ meeting. As such, the decision offers a clear demonstration of how various irregularities are assessed, with particular emphasis on materiality. The proposal’s terms are recorded in significant detail, helping future comparisons on similar facts. In addition, paragraphs [15]–[51] of the judgment set out, in depth, the principles applicable to material irregularity and unfair prejudice.

What was the background?

This dispute concerned a CVA approved at a creditors’ meeting on 19 May 2022. The proposal indicated that, unless adopted, Mizen was highly likely to enter administration, whereas approval would produce a superior return for unsecured creditors. It also identified ‘critical’ creditors—those whose payment was essential to the continued operation of Mizen’s business—were to be...

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