Mohammad Razi Khan v Arvinder Singh-Sall & Anor
[2023] EWCA Civ 1119
EFG Private Bank Limited v Kambiz Babaee
1 March 2024
[2024] EWHC 444 (Ch)
High Court
A bank sued a man for not paying back a huge loan secured by his house. The man tried to avoid bankruptcy by offering a payment plan, but the judge ruled the plan was unrealistic and declared him bankrupt.
Key Facts
- •EFG Private Bank Limited petitioned for the bankruptcy of Kambiz Babaee due to an unpaid interest-only mortgage of £5,950,000.
- •The mortgage was secured by a charge over Babaee's property, valued differently by various experts.
- •Babaee opposed the petition, raising issues with the property valuation, a cross-claim against the bank for mis-selling, and ongoing efforts to refinance or sell the property.
- •The court dismissed Babaee's application to set aside the statutory demand.
- •Babaee's cross-claim was struck out.
- •Babaee submitted a late Individual Voluntary Arrangement (IVA) proposal.
- •Three creditors supported the bankruptcy petition.
Legal Principles
The court must consider whether a debtor's IVA proposal is 'serious and viable' when determining the appropriateness of an interim order.
Hook v Jewson 1997 BPIR 100; Davidson v Stanley [2005] BPIR 279; Shah v Cooper [2003] BPIR 1018; Knowles v Coutts & Co [1998] BPIR 96
The court has discretion whether to grant a stay of bankruptcy proceedings pending an application for an interim order under ss254(1)(b)/254(2) of the Insolvency Act 1986.
Insolvency Act 1986, s254
An IVA proposal must have substance and be capable of serious consideration by creditors to be considered 'serious'. It must also be realistic and capable of implementation to be 'viable'.
Shah v Cooper [2003] BPIR 1018
The court should act as a filter to avoid unnecessary and wasteful convening of creditors' meetings if the IVA proposal is not serious or viable.
Davidson v Stanley [2005] BPIR 279
Courts should not allow applications for interim orders to postpone bankruptcy orders where there's no likelihood of creditor benefit.
Hook v Jewson [1997] 1 BCLC 664 Ch D
Outcomes
Bankruptcy order made against Kambiz Babaee.
The court found Babaee hopelessly insolvent. His IVA proposal was deemed neither serious nor viable due to speculative income projections and under-particularised legal claims. The late submission of the IVA proposal and the lack of a satisfactory explanation for the delay further contributed to the decision.