With unsecured debts of $566,800 and declared assets of only $3000, John David Sandford’s part-payment Insolvency Act proposal was refused High Court approval. Attempts to free his elderly spouse from joint debts at the same time was fatal to his personal proposal.
Mr Sandford offered to pay creditors ten cents in the dollar in full satisfaction. Creditors owed 95 per cent of his unsecured debt by value voted in favour; ANZ Bank and Diners Club voted against. With High Court approval, a part-payment scheme is binding on all creditors, including those voting against.
Associate judge Smith refused approval. The part-payment scheme was personal to Mr Sandford and his debts. His personal proposal could not extinguish debts owed by others, regardless of how many creditors voted in favour. It made no difference that those creditors agreeing to part-payment indicated informally after the vote that they would not chase his wife for full payment where there was joint liability. Seeking to discharge her joint liability as part of her husband’s proposal was not possible. Mr Sandford can start again and offer a fresh part-payment proposal to creditors covering liability for his debts alone, Judge Smith said.
re Sandford – High Court (15.03.19)
19.058