Mizen Design/Build Ltd - case update

A London-based construction company has entered administration after the High Court rejected the company’s CVA on the basis of inadequate disclosure to guarantee creditors.

Mizen Design/Build Ltd entered into a CVA in May last year, owing substantial debt to a number of different creditor groups. One of these groups was the guarantee creditors who benefitted from a guarantee provided by the company’s parent, Mizen Properties Limited.

Under the CVA, guarantee creditors stood to receive 7.5% of their claims. Meanwhile, the Estimated Outcome Statement provided to the guarantee creditors, which was premised on the assumption that the parent company would fail if the company failed, estimated that guarantee creditors would recover 5.3% of their guarantee claim.

The guarantee creditors argued that the financial position of the parent company had not been adequately disclosed to enable the guarantee creditors to assess the value of their guarantee claims. Therefore, they were unable to decide whether to vote in favour of the proposal, or not.

In March 2023, the High Court agreed, finding that the level of disclosure was lacking and that there had been a material irregularity.

On April 27, a High Court order revoked the CVA and Brian Burke and Andrew Andronikou of Quantuma Advisory were appointed Joint Administrators on the same day. The notice of their appointment can be found HERE.

Creditors with guarantee claims against the parent company are now free to pursue those claims.