The decision of Grant v CP Asset Management Ltd & Ors outlined the appropriate methodology to be used when examining whether a resolution passed at a creditors' meeting should be set aside as prejudicial to a creditor or class of creditors under section 245A of the Companies Act 1993.
Liquidators had been appointed to a company, but at a creditors' meeting the majority of creditors passed a resolution in favour of the appointment of new liquidators. The minority argued that the majority creditors were mostly related entities, and were suspicious of the motives of the proposed liquidators.
The Court stated that a resolution should only be set aside where it was found that the prejudice to creditors was unreasonable, having regard to the benefits resulting to the related creditors, and the nature of the relationship between the related creditors and the company. Prejudice itself would not be sufficient. In this case the minority could not establish that any prejudice, at that stage largely hypothetical, would be sufficiently unreasonable to warrant the setting aside of the resolution.
See Court decision here.