A property tycoon facing debts of £611m has lost a High Court battle with creditors over an individual voluntary arrangement (IVA) that would have seen creditors receive seven pence for every pound owed.
Moises Gertner obtained approval for the IVA in December 2015 when his largest creditor, Kaupthing Bank hf - reportedly owed £557m - voted in favour of the IVA proposal.
However a second creditor, CFL Finance Limited, which was owed £12m by Gertner, challenged the IVA and the position of Kaupthing Bank.
The high court today upheld CFL’s challenge, finding that the IVA with Kaupthing was a device designed to allow Gertner to avoid losing the vote in a creditors’ meeting. It concluded that that the vote in favour should be overturned.
The decision paves the way for all of the creditors to seek their debts in full from Gertner via a bankruptcy. It is expected that he will seek permission to appeal the judgment.
Hannah Blom-Cooper, a legal director in the fraud defence group at Mishcon de Reya, which advised CFL Finance Limited, said: “This judgment is a stern warning to debtors looking to abuse the IVA process by agreeing side deals with certain creditors.
“The court has shown that they will clamp down on any arrangements aimed at allowing debtors to avoid their obligations to creditors.”
This article featured in Property Week.
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