In our December 2012 insolvency update we reported on CP Asset Management Ltd v Grant, in which the High Court upheld a creditors' resolution to appoint new liquidators. The High Court found that a resolution should only be set aside when it was found that the prejudice to creditors was unreasonable. In the High Court, the minority of creditors who voted against the resolution were unable to establish that any prejudice would warrant setting aside the resolution.
Based on fresh evidence, including a six-monthly report of the new liquidators, the Court of Appeal concluded that the creditors' resolution to appoint alternative liquidators was contrary to the interests of a class of creditors (in this case, the unsecured creditors). The production of fresh evidence showing the course of events since the High Court judgment was crucial to this decision. The case is a reminder of the power of the courts to overturn a resolution passed by majority creditors that unreasonably prejudices minority creditors.
See Court decision here.