Creditors' Right to Requisition Meetings – the 25% threshold …

Any scheme (if any were to arise) that makes it more difficult for creditors to appoint an IP as liquidator / trustee in bankruptcy (if that is their wish and statutory right of choice), arguably may not appear to be in either the public interest or the interests of creditors generally.
This appears important given the Insolvency Service appears to have limited jurisdiction to sanction the use of the public purse to prosecute claims or causes of action for the purpose of swelling a company in liquidation’s or bankruptcy estate’s assets. Any process that appears to act inconsistently with the interests or wishes of creditors in such regards given many causes of action are time specific, risks creditors suffering losses from actions becoming statute barred by the Limitation Act 1980.
At risk for example might be actions capable of being brought under Section 212 of the Insolvency Act 1986 where time starts running from the date of the transaction being complained about, not from the date of liquidation. It is not unheard of for directors to fail to disclose breaches of duty that have arisen historically and often until a detailed investigation is undertaken the same might not be discovered.
When the Insolvency Act 1986 was running through parliament (Insolvency Bill 1985) the 25% threshold was considered. Initial drafting of the Bill had that threshold at 50% which for the reasons set out below was amended due to the restriction it would place on creditors. Any future reconsideration of that position should be very carefully considered before any such potential barrier is introduced affecting creditors arguably detrimentally.
Hansard extract of Lord Lucas of Chilworth concerning the 1985 Bill for insolvency in which reference was made to the 25% position, noted the reasons for dropping the proposed 50% threshold: http://hansard.millbanksystems.com/lords/1985/oct/23/commons-amendments-36
All these amendments constitute a package dealing with various matters relating to the appointment of liquidators, trustees and their committees and the period within which the dissolution of a company can be declared void. Many of these amendments are quite simply drafting or technical in nature, but I should like 1221 to draw the attention of your Lordships to the following groups of amendments which deal with the ability of creditors to requisition meetings in insolvency proceedings. Amendments Nos. 149, 161, 283 and 290 reduce from one half to one quarter the proportion of creditors required to requisition meetings for the purpose of appointing or, in certain cases where an appointment has been made by the Secretary of State or the court, removing a liquidator or trustee in bankruptcy. These amendments were made by the Government in the light of comments made in another place that the proportion of 50 per cent. was too high and that it would in fact be unduly restrictive on the ability of creditors to requisition meetings. [added emphasis]

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