Section 262: Challenge of creditors' decision., Insolvency Act 1986

Subject to this section, an application to the court may be made, by any of the persons specified below, on one or both of the following grounds, namely—

that a voluntary arrangement approved by a decision of the debtor's creditors pursuant to section 257 unfairly prejudices the interests of a creditor of the debtor;

that there has been some material irregularity in relation to a creditors' decision procedure instigated under that section.

The persons who may apply under this section are—

the debtor;

a person who—

was entitled, in accordance with the rules, to vote in the creditors' decision procedure, or

would have been so entitled if he had had notice of it

the nominee (or his replacement under section 256(3), 256A(4) or 258(3)); and

if the debtor is an undischarged bankrupt, the trustee of his estate or the official receiver.

An application under this section shall not be made

after the end of the period of 28 days beginning with the day on which the creditors decided whether to approve the proposed voluntary arrangement or, where a report was required to be made to the court under section 259(1)(b), the day on which the report was made or

in the case of a person who was not given notice of the creditors' decision procedure, after the end of the period of 28 days beginning with the day on which he became aware that a decision as to whether to approve the proposed voluntary arrangement had been made,

but (subject to that) an application made by a person within subsection (2)(b)(ii) on the ground that the arrangement prejudices his interests may be made after the arrangement has ceased to have effect, unless it has come to an end prematurely.

Where on an application under this section the court is satisfied as to either of the grounds mentioned in subsection (1), it may do one or both of the following, namely—

revoke or suspend any approval given by a decision of the debtor's creditors;

direct any person to seek a decision from the debtor's creditors (using a creditors' decision procedure) as to whether they approve—

any revised proposal the debtor may make, or

in a case falling within subsection (1)(b), the debtor's original proposal.

Where at any time after giving a direction under subsection (4)(b) in relation to a revised proposal the court is satisfied that the debtor does not intend to submit such a proposal, the court shall revoke the direction and revoke or suspend any approval previously given by the debtor's creditors.

Where the court gives a direction under subsection (4)(b), it may also give a direction continuing or, as the case may require, renewing, for such period as may be specified in the direction, the effect in relation to the debtor of any interim order.

In any case where the court, on an application made under this section with respect to a creditors' decision, gives a direction under subsection (4)(b) or revokes or suspends an approval under subsection (4)(a) or (5), the court may give such supplemental directions as it thinks fit and, in particular, directions with respect to—

things done since the decision under any voluntary arrangement approved by the meeting, and

such things done since the decision as could not have been done if any interim order had been in force in relation to the debtor when they were done.

Except in pursuance of the preceding provisions of this section, the approval of a voluntary arrangement by a decision of the debtor's creditors pursuant to section 257 is not invalidated by any irregularity in relation to the creditors' decision procedure by which the decision was made.

Section 262: Challenge of creditors' decision.

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