With facts described as "labyrinthine", Edgeworth Capital (Luxembourg) SARL v Maud  EWHC 974 (Ch) is the latest judgment from Snowden J on efforts to bankrupt Mr Maud.
Snowden J’s latest judgment deals with three issues:
- How the court considers the position of supporting and opposing creditors
- How the court approaches petitions that are ostensibly abuses of process
- The discretion not to make an order when it has no utility.
On the first issue, the starting point for the court is to look at the value of debts of the creditors on each side of a disagreement among the class. However, beyond simple mathematics, the court will also assess the reasons advanced by the creditors on each side of the debate to check for rationality and bias.
Snowden J rejected the proposition that the court must formulate some view of a hypothetical rational creditor who is a member of the class or impose its own view of the commercial merits or the best interests of the class.
Second, Snowden J considered there will be an abuse of process to pursue insolvency proceedings in respect of an undisputed debt when the petitioner:
- Only issues or threatens to issue the proceedings to put pressure on the target to take some other action which the target is otherwise unwilling to take
- Does want to achieve the relief sought but he is not acting in the interests of the class of creditors of which he is one, or where the success of his petition will operate to the disadvantage of the body of creditors
- Wants a bankruptcy order to be made, but recovering its debt through the bankruptcy process is no part of its purpose.
The Court considered that a petition will not be an abuse of process if, in addition to wishing to receive a dividend on his debt in the bankruptcy together with other creditors, the petitioner has a collateral purpose which is not shared with the other creditors, but which will not cause them any detriment if achieved.
Finally, Snowden J dealt with utility. Mr Maud, supported by another creditor, opposed the making of an order on the basis that bankruptcy would serve no useful purpose as there were no assets, other than some shares of doubtful value, from which creditors’ claims could be satisfied. Because there was evidence of the existence of some assets and dealings in the shares, Snowden J could not conclude that a bankruptcy order would a pointless exercise for Mr Maud's creditors.
The decision can be found here.