Key Facts
- •BV8 Limited appealed the rejection of its Proof of Debt by the Joint Administrators of BV9 Limited (in administration).
- •The Proof of Debt claimed £1,074,036.91 as BV8's earned interest margin on the assignment of loan books from BV8 to BV9.
- •BV8's claim evolved during the appeal, shifting from interest margin to a loan of £1,074,036.91 made on December 16, 2020, and finally to a claim for an account of inter-company dealings.
- •The Administrators argued that BV8's claim changed significantly without prior warning and lacked sufficient detail.
- •BV8 and BV9 were special purpose vehicles involved in VAT bridging finance, structured to minimize withholding tax.
- •The Assignments between BV8 and BV9 did not explicitly mention the interest margin or the December 2020 payment.
- •The court considered the authenticity and reliability of BV8's board minutes and accounting records.
- •Kookmin Bank, the major creditor, was not a party to the appeal.
Legal Principles
A proof of debt must include details of how and when the debt was incurred, substantiating documents, and any deductions (Rule 14.4, Insolvency (England and Wales) Rules 2016).
Insolvency (England and Wales) Rules 2016, Rule 14.4
Entire agreement clauses prevent parties from introducing terms outside the written agreement (Inntrepreneur Pub Company (GL) v East Crown Limited [2000] 2 Lloyds Rep 611; MWB Business Exchange Ltd v Rock Advertising Ltd [2018] UKSC 24).
Inntrepreneur Pub Company (GL) v East Crown Limited [2000] 2 Lloyds Rep 611; MWB Business Exchange Ltd v Rock Advertising Ltd [2018] UKSC 24
The court must consider fairness and the overriding objective when assessing appeals (CPR PD 39A para 6.1).
CPR PD 39A para 6.1
Directors have duties under the Companies Act 2006 (sections 171, 172, 175, 176, 182-185) and the Insolvency Act 1986 (sections 235, 236) to maintain accurate accounting records and act in the best interests of the company.
Companies Act 2006, sections 171, 172, 175, 176, 182-185; Insolvency Act 1986, sections 235, 236
Outcomes
The appeal was dismissed.
The court found that BV8's claim had fundamentally changed during the appeal, and the Administrators had not had the opportunity to address the evolving claims. The evidence presented by BV8 was deemed unreliable and insufficient to support its claims. The estoppel argument failed due to lack of representation. The court could not determine the superseding claims due to insufficient evidence and numerous investigatory issues.