The chairman should only proceed to put resolutions to the meeting for voting purposes once he/she has established that a quorum is present and the meeting is therefore competent to act [Note 1]. See Part 4, paragraphs 16.41 to 16.43 for further information concerning what constitutes a quorum and the action to be taken if a quorum is not present.
The chairman should also have established which proofs he/she will admit for voting purposes and for what amount, proxies should have been checked for validity and any attendance matters and/or questions allowed should have been resolved. See Part 4 for general matters of conduct relating to the holding of a meeting and paragraph 16.47 for details of the resolutions, which may be passed at first meetings.
Where a creditor is entitled to vote his/her proof having been admitted for voting purposes and he/she has also lodged a claim in other proceedings, (within a member state) only the creditor’s vote should be counted in regard to that debt. The trustee or liquidator of the other proceedings should reduce their claim by the sum attributable to that creditor [Note 4] [Note 5]. For any meetings involving such claims reference should be made to Chapter 41 in general and in particular to paragraph 41.14.
When dealing with smaller meetings and/or the proofs and proxies submitted indicate there is unlikely to be any dispute over the matter being resolved upon, the chairman may take a vote via an informal show of hands indicating each creditor’s intention should a formal vote subsequently be taken. Where the show of hands indicates that a certain result will be carried by a majority of creditors and there is no objection otherwise the outcome may be taken as conclusive. Where an objection is raised by an interested party, whether entitled to vote at the meeting or not, the more formal procedure as set out in the Insolvency Rules 1986 and detailed below should be followed.
At a meeting of creditors or contributories, for each resolution put to the meeting each creditor, or valid proxy-holder, entitled to vote can chose to abstain, vote for, or vote against any resolution put to the meeting.
A resolution is normally passed when a majority (in value) of those present and voting, in person or by proxy, vote in favour of the resolution, regardless of the extent of the majority.
(Amended July 2010)
Nominations for the appointment of an insolvency practitioner to act as trustee or liquidator should be requested before any vote is taken. A proxy-holder with a special proxy requiring him/her to vote for the appointment of a particular insolvency practitioner is required to nominate that person [Note 8]. It is also possible that the chairman of the meeting may need to make more than one nomination where he/she holds such proxies [Note 9] [Note 10].
Unless the chairman has good reason for suspecting that the person nominated to act as trustee or liquidator is not qualified to act as an insolvency practitioner, he/she must accept all nominations and put them to the meeting. There should be no nomination at either meeting for the appointment of the official receiver as liquidator or trustee as no such resolution may be passed [Note 11] [Note 12].
For cases where the petition was presented prior to 6 April 2010 the rules prior to the Insolvency (Amendment) Rules (IAR) 2010 continue to apply and for these cases the support referred to must represent a majority in value of all those present at the meeting in person or by proxy and entitled to vote (whether or not they do actually vote).
Where there are three or more nominees, those entitled to vote are invited to support their favoured candidate, rather than voting for or against each one. If one nominee has a clear majority in value, over both, or all of the others together, that nominee will be appointed [Note 15] [Note 14].
Where there are three or more nominees, but after the first round of voting, no one nominee has more support in value than all the others put together, the candidate with the least support is eliminated from the next round of voting (unless one of the other candidates withdraws, in which case the nominee with least support has another chance).
Depending on the number of original candidates, further rounds of voting on the same basis take place, with one candidate being eliminated each time, until either one nominee has more support than all the others remaining put together, or there are only two candidates left and one has more support than the other [Note 16] [Note 17].
If a proxy-holder is entitled by the proxy he/she holds, to vote for only one particular insolvency practitioner and the terms of the proxy preclude him/her from voting in any other way, if that insolvency practitioner is eliminated in a round of voting, the proxy-holder will not be entitled to vote in the next round. The value of the proxy-holder’s principal’s claim need not be counted as being entitled to vote for the purposes of the next round of voting [Note 8] [Note 18] [Note 19]. However, if the terms of the proxy do not preclude him/her from voting in any other way, the proxy-holder can vote at his/her discretion if the nominated insolvency practitioner is knocked out [note 52].
If there is a tie in the votes for the appointment of insolvency practitioners as trustee or liquidator, a resolution may be put to the meeting for a joint appointment of any two or more nominees. Such a resolution may be put to the meeting at any time, and should especially be considered where it appears that two candidates are both very evenly supported by the substantial voting power of creditors [Note 20] [Note 21].
Where a resolution for a joint appointment is passed, the chairman should also put to the meeting a resolution specifying whether acts of the appointees are to be done by both or each of them, or by only one. The resolution regarding the functions of each joint appointee must be recorded to avoid a situation where actions taken by one of them could be challenged. For pre 6 April 2010 petition cases the specific resolution should be filed at court with the resolution for the joint appointment as evidence of the each appointee’s authorisation, the filing requirements have been removed for post 6 April 2010 petition cases [Note 22] [Note 23] [Note 24] [Note 25] [Note 26] [Note 27].
(Amended July 2010)
The IAR 2010 has provided for the passing of resolutions by correspondence alone, without the requirement of holding a meeting. The exception to this rule is where the Act requires that a particular resolution be passed at a meeting, therefore, this provision could not be used to effect the appointment of an IP as liquidator or trustee and is unlikely to be utilised by the official receiver [Note 30] [Note 31].
Notice of the proposed resolution must be given to every creditor or contributory who would have been entitled to be notified of the meeting if one were to be held [Note 32] [Note 33]. The notice must state a closing date for submission of votes. The closing date is set at the discretion of the liquidator / trustee but must be not less than 14 days from the giving of notice of the resolution [Note 34] [Note 35]. Votes must be received by the liquidator or trustee in writing by 12.00 hours on the closing date specified in the notice, and creditors should ensure that their vote is accompanied by a proof of debt unless a proof has already been lodged [Note 36] [Note 37]. Where votes are received from creditors without a proof of debt being lodged, the vote will be disregarded [Note 38] [Note 39].
For the resolution to be passed the liquidator or trustee must receive at least one valid vote [Note 40] [Note 41]. In the absence of any valid votes the liquidator / trustee must call a meeting of creditors or contributories at which the resolution could be passed [Note 42] [Note 43].
If a creditor or contributory wishes to make a request to the liquidator or trustee for the resolution to be considered at a meeting, the creditor or contributory must hold at least 10% of the total debts of the company or bankrupt, and their request must be made within 5 business days of the date of the notice of the resolution [Note 44] [Note 45] [Note 46].
The liquidator or trustee nominated should be impartial, and if the chairman knows that some objection might be taken to a nominee, he/she should inform the meeting(s) of this, so that those present may take it into account when making their nominations. This may arise where a nominee has had previous dealings with the company or bankrupt or is thought to be an accounting party (e.g. a creditor or debtor in the proceedings). Reference should be made to Chapter 55, Part 2 for further information regarding insolvency practitioners generally and their professional conduct and ethics.
A body corporate cannot be appointed and, generally speaking, in a liquidation the appointment of a shareholder or officer of the company would be improper, and that of an administrative receiver or former voluntary liquidator undesirable [Note 47].
It is not usual for this matter to be decided at a first meetings convened by the official receiver, but potential appointees may be asked before the meeting, or at the meeting, if they have a representative present, whether they wish the matter to be dealt with, especially if no committee is nominated [Note 50] [Note 51].