Proofs of debt and costs

10 SEPTEMBER 2020

| 2 min read

In connection with a creditors’ meeting convened to appoint a liquidator to Rochay Productions Limited, the parent company submitted a proof of debt, which the court found to be indefensible. The parent company was in fact a debtor and not a creditor, documents in support had been backdated and it was clear that the proof of debt had been knowingly submitted on a false basis.

A creditor challenged the admission of the proof. The parent company opposed that challenge. On appeal the creditor sought and obtained an indemnity costs order against the parent company, because of the clear falsity of the proof of debt.

The creditor also sought a costs order against the chair of the meeting, a director who had been appointed a month before the creditors’ meeting, whose decision it had been to admit the false proof of debt.

However, under rule 15.35(6) Insolvency Rules “the person who made the decision is not personally liable for costs incurred by any person in relation to an appeal under this rule unless the court makes an order to that effect.”

In the circumstances of this case and against the backdrop of rule 15.35(6) there was no good reason why the chair of the meeting should be personally liable for the costs of the creditor having to appeal the decision to admit the parent company proof of debt.

In the matter of Rochay Productions Limited [2020] EWHC 1737 (Ch)

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Proofs of debt and costs

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