While the company is in liquidation with a liquidator appointed once the Members’ Meeting has been held, the creditors still have to ratify the appointment of the liquidator. Due to the new Insolvency Rules, since April 2017 there is no longer a requirement to hold a Physical Meeting of Creditors to ratify the appointment of the liquidator. The appointment can now be deemed as accepted, unless sufficient creditors object to this. This is the “Deemed Consent Procedure”. Alternatively, a “Virtual Meeting of Creditors” can be held where the creditors attend by conference-call rather than in person. Our preferred approach though is to use the “Deemed Consent Procedure”.
We keep a register of any objections. As soon as 10% of creditors who would be entitled to vote at a meeting object, then the deemed consent process automatically terminates and we have to convene a physical meeting.
It is also possible for creditors to requisition a physical meeting, but in order for one to be summoned it must be explicitly requested by either:
- 10% of the total creditors (by value); or
- 10% of the total number of creditors; or
- 10 individual creditors.
This is known as the ‘10/10/10 threshold’.
Once this ‘10/10/10 threshold’ has been met, or if sufficient objections to the Deemed Consent Procedure are received, then within three days we will convene a physical meeting. We will notify the directors and they will be required to attend the meeting. While every effort will be made to ensure that it is held on the same day as the Members’ Meeting – for everyone’s convenience – that will not be possible if the request for a meeting or objections are received after the time of the Members’ Meeting. It is to reduce the chances of that happening that we hold the Member’s Meeting in the late afternoon, since creditors can object at any time prior to 23.59 hours that day.
In our experience, since the new Insolvency Rules were introduced, it is very rare that a Creditors’ Meeting is explicitly requested, although there are occasionally objections to the Deemed Consent Procedure.