We usually try not to disagree with the regulators and their monitors, as it is often easier to accept their interpretation of a particular rule than to risk winding them up by arguing. Recently, however, we saw a monitor saying that there should be no resolutions at final meetings in CVLs and MVLs. At the risk of being awkward, we don’t think it is as simple as that.
We have been persuading clients for years to avoid unnecessary resolutions and we regularly suggest deleting unnecessary or incorrect resolutions. If you have anything that approves your final report, for example, there is no point in having a vote on it. If the creditors say “no”, you are not going to adjourn the meeting and change it to reflect their objection. Similarly, if you seek authority to destroy the company’s accounting records, that is inappropriate because your right to do so is set out in statute (regulation 16 of the Insolvency Regulations 1994) and any such resolution would not over-rule that.
However, we think that things are a bit different when it comes to release. In MVLs, you get your release automatically when you vacate office, so seeking a resolution about release at the final meeting is unnecessary. We have amended a couple of our documents that suggested otherwise, such as our final report, and we will be including those changes in the next update of our documents that we make available to our clients on the Creditor Gateway, which will be in April. In CVLs, however, then according to section 173(2)(e)(ii) you get your release if nobody votes against it at the final meeting of creditors. To our way of thinking, you should give the creditors an opportunity to vote on it. Surely it goes against the ethical principles of transparency and fairness if you have no resolution relating to release and expect the creditors to have such a detailed knowledge of insolvency law and practice that they know of their ability to vote against release and how to put the issue on the agenda for a final meeting?
Our advice therefore remains: avoid unnecessary and incorrect resolutions, but we think you should provide creditors with an opportunity to vote on release at the final meetings in CVLs.
