Insolvency Act 2000
2000 CHAPTER 39
ARRANGEMENT OF SECTIONS
Preamble
Voluntary arrangements
1.
Moratorium where directors propose voluntary arrangement.
2. Company
voluntary arrangements.
3.
Individual voluntary arrangements.
4.
Qualification or authorisation of nominees and
supervisors.
Disqualification
of company directors etc.
5.
Disqualification orders.
6.
Disqualification undertakings.
7. Effect of
Northern Irish disqualifications.
8.
Amendments.
Miscellaneous
9.
Administration orders.
10. Investigation
and prosecution of malpractice.
11.
Restriction on use of answers obtained under compulsion.
12.
Insolvent estates of deceased persons.
13.
Bankruptcy: interest on sums held in Insolvency Services Account.
14. Model
General
15.
Amendments of Financial Services and Markets Act 2000 and repeals.
16.
Commencement.
17. Extent.
18. Short
title.
Schedules:
Schedule 1
Moratorium
where directors propose voluntary arrangement.
Amendments
of the Insolvency Act 1986
Schedule 2
Company
voluntary arrangements.
Part I
Amendments
of the Insolvency Act 1986.
Part II
Amendments
of the Building Societies Act 1986.
Schedule 3
Individual
voluntary arrangements.
Schedule 4
Minor and
consequential amendments about disqualification of company directors etc..
Part I
Amendments
of the Company Directors Disqualification Act 1986.
Part II
Consequential
amendments of other enactments.
Schedule 5
Repeals.
An Act to
amend the law about insolvency; to amend the Company Directors Disqualification
Act 1986; and for connected purposes.
[30th
November 2000]
Be it
enacted by the Queen’s most Excellent Majesty, by and with the advice and
consent of the Lords Spiritual and Temporal, and Commons, in this present
Parliament assembled, and by the authority of the same, as follows:—
Voluntary
arrangements
1 Moratorium
where directors propose voluntary arrangement Schedule 1 (which—
(a) enables the directors of
(b) makes provision about the approval and implementation of
such a voluntary arrangement where a moratorium is obtained, and
(c) makes consequential amendments),
is
to have effect.
2 Company
voluntary arrangements Schedule 2 (which—
(a) amends the provisions about company voluntary arrangements
under Part I of the [1986 c. 45.] Insolvency Act 1986, and
(b) in consequence of Schedule 1 and those amendments, makes
amendments of the [1986 c. 53.] Building Societies Act 1986),
is
to have effect.
3
Individual voluntary arrangements Schedule 3 (which enables the procedure for
the approval of individual voluntary arrangements under Part VIII of the [1986
c. 45.] Insolvency Act 1986 to be started without an initial
moratorium for the insolvent debtor and makes other amendments of the
provisions about individual voluntary arrangements) is to have effect.
4
Qualification or authorisation of nominees and
supervisors (1) Part XIII of the [1986 c. 45.] Insolvency
Act 1986 (insolvency practitioners and their qualification) is amended as
follows.
(2) In
section 388 (meaning of “act as insolvency practitioner”)—
(a) for subsection (1)(b) there is substituted—
“(b) where a voluntary arrangement in relation to the company is
proposed or approved under Part I, as nominee or supervisor”,
(b) for subsection (2)(c) there is substituted—
“(c) where a voluntary arrangement in relation to the individual
is proposed or approved under Part VIII, as nominee or supervisor”, and
(c) after subsection (2A) there is inserted—
“(2B) In
relation to a voluntary arrangement proposed under Part I or VIII, a person
acts as nominee if he performs any of the functions conferred on nominees under
the Part in question.”
(3) In
section 389 (acting without qualification an offence), after subsection (1)
there is inserted—
“(1A) This section is subject to section 389A.”
(4) After
that section there is inserted—
“389A Authorisation of nominees and supervisors (1) Section 389
does not apply to a person acting, in relation to a voluntary arrangement
proposed or approved under Part I or Part VIII, as nominee or supervisor if he
is authorised so to act.
(2) For the
purposes of subsection (1) and those Parts, an individual to whom subsection
(3) does not apply is authorised to act as nominee or
supervisor in relation to such an arrangement if—
(a) he is a member of a body recognised
for the purpose by the Secretary of State, and
(b) there is in force security (in
(3) This
subsection applies to a person if—
(a) he has been adjudged bankrupt or sequestration of his estate
has been awarded and (in either case) he has not been discharged,
(b) he is subject to a disqualification order made or a
disqualification undertaking accepted under the [1986 c. 46.] Company Directors
Disqualification Act 1986 or to a disqualification order made under Part II of
the [S.I. 1989/2404 (N.I. 18).] Companies (
(c) he is a patient within the meaning of Part VII of the [1983
c. 20.] Mental Health Act 1983 or section 125(1) of the [1984
c. 36.] Mental Health (
(4) The
Secretary of State may by order declare a body which appears to him to fall
within subsection (5) to be a recognised body for the
purposes of subsection (2)(a).
(5) A body
may be recognised if it maintains and enforces rules
for securing that its members—
(a) are fit and proper persons to act as nominees or
supervisors, and
(b) meet acceptable requirements as to education and practical
training and experience.
(6) For the
purposes of this section, a person is a member of a body only if he is subject
to its rules when acting as nominee or supervisor (whether or not he is in fact
a member of the body).
(7) An order
made under subsection (4) in relation to a body may be revoked by a further
order if it appears to the Secretary of State that the body no longer falls
within subsection (5).
(8) An order
of the Secretary of State under this section has effect from such date as is
specified in the order; and any such order revoking a previous order may make
provision for members of the body in question to continue to be treated as
members of a recognised body for a specified period
after the revocation takes effect.”
Disqualification
of company directors etc.
5
Disqualification orders (1) In section 1 of the [1986
c. 46.] Company Directors Disqualification Act 1986 (disqualification orders:
general), in subsection (1), for the words following “an order that” there is
substituted “for a period specified in the order—
(a) he shall
not be a director of
(b) he shall not act as an insolvency practitioner.”
(2) At the
end of subsection (2) of that section there is inserted “and, unless the court
otherwise orders, the period of disqualification so imposed shall begin at the
end of the period of 21 days beginning with the date of the order”.
(3) In
section 22 of that Act (interpretation), at the end there is inserted—
“(10) Any
reference to acting as receiver—
(a) includes acting as manager or as both receiver and manager,
but
(b) does not include acting as administrative receiver;
and
“receivership” is to be read accordingly.”
6
Disqualification undertakings (1) The Company Directors Disqualification Act
1986 is amended in accordance with this section.
(2) After
section 1 there is inserted—
“1A
Disqualification undertakings: general (1) In the
circumstances specified in sections 7 and 8 the Secretary of State may accept a
disqualification undertaking, that is to say an undertaking by any person that,
for a period specified in the undertaking, the person—
(a) will not
be a director of
(b) will not act as an insolvency practitioner.
(2) The
maximum period which may be specified in a disqualification undertaking is 15
years; and the minimum period which may be specified in a disqualification
undertaking under section 7 is two years.
(3) Where a disqualification
undertaking by a person who is already subject to such an undertaking or to a
disqualification order is accepted, the periods specified in those undertakings
or (as the case may be) the undertaking and the order shall run concurrently.
(4) In
determining whether to accept a disqualification undertaking by any person, the
Secretary of State may take account of matters other than criminal convictions,
notwithstanding that the person may be criminally liable in respect of those
matters.”
(3) In
section 7 (applications to court under section 6; reporting provisions), after
subsection (2) there is inserted—
“(2A) If it
appears to the Secretary of State that the conditions mentioned in section 6(1)
are satisfied as respects any person who has offered to give him a
disqualification undertaking, he may accept the undertaking if it appears to
him that it is expedient in the public interest that he should do so (instead
of applying, or proceeding with an application, for a disqualification order).”
(4) In
section 8 (disqualification after investigation of company), after subsection
(2) there is inserted—
“(2A) Where it appears to the Secretary of State from such report,
information or documents that, in the case of a person who has offered to give him
a disqualification undertaking—
(a) the conduct of the person in relation to
(b) it is expedient in the public interest that he should accept
the undertaking (instead of applying, or proceeding with an application, for a
disqualification order),
he
may accept the undertaking.”
(5) After
that section there is inserted—
“8A
Variation etc. of disqualification undertaking (1) The
court may, on the application of a person who is subject to a disqualification
undertaking—
(a) reduce the period for which the undertaking is to be in
force, or
(b) provide for it to cease to be in force.
(2) On the
hearing of an application under subsection (1), the Secretary of State shall
appear and call the attention of the court to any matters which seem to him to
be relevant, and may himself give evidence or call
witnesses.
(3) In this
section “the court” has the same meaning as in section 7(2) or (as the case may
be)
(6) In
section 9 (matters for determining unfitness of directors), after subsection
(1) there is inserted—
“(1A) In
determining whether he may accept a disqualification undertaking from any
person the Secretary of State shall, as respects the person’s conduct as a
director of any company concerned, have regard in particular—
(a) to the matters mentioned in Part I of Schedule 1 to this
Act, and
(b) where the company has become insolvent, to the matters
mentioned in Part II of that Schedule;
and
references in that Schedule to the director and the company are to be read
accordingly.”
7 Effect of
Northern Irish disqualifications (1) After section 12
of the [1986 c. 46.] Company Directors Disqualification Act 1986 there is
inserted—
“12A
Northern Irish disqualification orders A person
subject to a disqualification order under Part II of the [S.I. 1989/2404 (N.I.
18).] Companies (
(a) shall
not be a director of
(b) shall not act as an insolvency practitioner.”
(2) If
provision is made in relation to
(3) A
statutory instrument containing an order under this section is to be subject to
annulment in pursuance of a resolution of either House of Parliament.
8 Amendments
Schedule 4 (which makes minor and consequential amendments about the
disqualification of company directors, etc.) is to have effect.
Miscellaneous
9
Administration orders (1) Part II of the [1986 c. 45.]
Insolvency Act 1986 (administration orders) is amended as follows.
(2) In
section 10 (effect of application), after paragraph (a) of subsection (1) there
is inserted—
“(aa) no landlord or other person to whom rent is payable may
exercise any right of forfeiture by peaceable re-entry in relation to premises
let to the company in respect of a failure by the company to comply with any
term or condition of its tenancy of such premises, except with the leave of the
court and subject to such terms as the court may impose”.
(3) In
section 11 (effect of order), after paragraph (b) of subsection (3) there is
inserted—
“(ba) no landlord or other person to whom rent is payable may
exercise any right of forfeiture by peaceable re-entry in relation to premises
let to the company in respect of a failure by the company to comply with any
term or condition of its tenancy of such premises, except with the consent of the
administrator or the leave of the court and subject (where the court gives
leave) to such terms as the court may impose”.
10
Investigation and prosecution of malpractice (1) Section 218 of the [1986 c.
45.] Insolvency Act 1986 (prosecution of delinquent
officers and members of company) is amended as follows.
(2) In
subsection (1), for “to the prosecuting authority” there is substituted—
“(a) in the
case of a winding up in
(b) in the case of a winding up in
(3)
Subsection (2) is omitted.
(4) In
subsection (4)—
(a) for the words from the beginning of paragraph (a) to “that
authority” in paragraph (b) there is substituted “forthwith report the matter—
(a) in the case of a winding up in
(b) in the case of a winding up in
and
shall furnish to the Secretary of State or (as the case may be) the Lord
Advocate”,
(b) for “the authority” there is substituted “the Secretary of
State or (as the case may be) the Lord Advocate”.
(5) For
subsection (5) there is substituted—
“(5) Where a
report is made to the Secretary of State under subsection (4) he may, for the
purpose of investigating the matter reported to him and such other matters
relating to the affairs of the company as appear to him to require
investigation, exercise any of the powers which are exercisable by inspectors
appointed under section 431 or 432 of the Companies Act to investigate
(6) In
subsection (6)(b), “to the prosecuting authority” is
omitted.
(7) In
section 219 of that Act (obligations arising under section 218)—
(a) in
subsection (1), for “under section 218(5)” there is substituted “in consequence
of a report made to him under section 218(4)” and for “that subsection” there
is substituted “section 218(5)”,
(b) in subsection (3), for “the prosecuting authority” and “that
authority” there is substituted “the Director of Public Prosecutions, the Lord
Advocate”,
(c) in subsection (4), for “prosecuting authority” there is
substituted “Director of Public Prosecutions, the Lord Advocate”.
11
Restriction on use of answers obtained under compulsion In
section 219 of the [1986 c. 45.] Insolvency Act 1986, after subsection (2)
(answers given by a person pursuant to powers conferred by section 218 may be
used in evidence against him) there is inserted—
“(2A)
However, in criminal proceedings in which that person is charged with an
offence to which this subsection applies—
(a) no evidence relating to the answer may be adduced, and
(b) no question relating to it may be asked,
by
or on behalf of the prosecution, unless evidence relating to it is adduced, or
a question relating to it is asked, in the proceedings by or on behalf of that
person.
(2B)
Subsection (2A) applies to any offence other than—
(a) an offence under section 2 or 5 of the [1911 c. 6.] Perjury
Act 1911 (false statements made on oath otherwise than in judicial proceedings
or made otherwise than on oath), or
(b) an offence under section 44(1) or (2) of the [1995 c. 39.]
Criminal Law (Consolidation) (
12 Insolvent
estates of deceased persons (1) After section 421 of
the [1986 c. 45.] Insolvency Act 1986 (power to apply provisions of Act to
insolvent estates of deceased persons) there is inserted—
“421A
Insolvent estates: joint tenancies (1) This section
applies where—
(a) an insolvency administration order has been made in respect
of the insolvent estate of a deceased person,
(b) the petition for the order was presented after the
commencement of this section and within the period of five years beginning with
the day on which he died, and
(c) immediately before his death he was beneficially entitled to
an interest in any property as joint tenant.
(2) For the
purpose of securing that debts and other liabilities to which the estate is
subject are met, the court may, on an application by the trustee appointed
pursuant to the insolvency administration order, make an order under this
section requiring the survivor to pay to the trustee an amount not exceeding
the value lost to the estate.
(3) In
determining whether to make an order under this section, and the terms of such
an order, the court must have regard to all the circumstances of the case,
including the interests of the deceased’s creditors and of the survivor; but,
unless the circumstances are exceptional, the court must assume that the
interests of the deceased’s creditors outweigh all other considerations.
(4) The
order may be made on such terms and conditions as the court thinks fit.
(5) Any sums
required to be paid to the trustee in accordance with an order under this
section shall be comprised in the estate.
(6) The
modifications of this Act which may be made by an order under section 421
include any modifications which are necessary or expedient in consequence of
this section.
(7) In this
section, “survivor” means the person who, immediately before the death, was
beneficially entitled as joint tenant with the deceased or, if the person who
was so entitled dies after the making of the insolvency administration order,
his personal representatives.
(8) If there
is more than one survivor—
(a) an order under this section may be made against all or any
of them, but
(b) no survivor shall be required to pay more than so much of
the value lost to the estate as is properly attributable to him.
(9) In this
section—
“insolvency administration order” has the same meaning as in
any order under section 421 having effect for the time being,
“value lost
to the estate” means the amount which, if paid to the trustee, would in the
court’
(2) In
subsection (1) of section 421, after “apply” there is inserted “in relation”.
13
Bankruptcy: interest on sums held in Insolvency Services Account (1) In
Schedule 9 to the [1986 c. 45.] Insolvency Act 1986 (individual insolvency
rules), in paragraph 21, for “handled” there is substituted “invested or
otherwise handled and with respect to the payment of interest on sums which, in
pursuance of rules made by virtue of this paragraph, have been paid into the
Insolvency Services Account”.
(2) In
section 406 of that Act (interest on money received by liquidators and
invested)—
(a) for “
(b) for the sidenote there is
substituted “Interest on money received by liquidators or trustees in
bankruptcy and invested”.
14 Model
(2) In
particular, the regulations may—
(a) apply any provision of insolvency law in relation to foreign
proceedings (whether begun before or after the regulations come into force),
(b) modify the application of insolvency law (whether in
relation to foreign proceedings or otherwise),
(c) amend any provision of section 426 of the [1986 c. 45.] Insolvency
Act 1986 (co-operation between courts),
and
may apply or, as the case may be, modify the application of insolvency law in
relation to the Crown.
(3) The
regulations may make different provision for different purposes and may make—
(a) any supplementary, incidental or consequential provision, or
(b) any transitory, transitional or saving provision,
which
the Secretary of State considers necessary or expedient.
(4) In this
section—
“foreign proceedings” has the same meaning as in the model
“insolvency law” has the same meaning as in section
426(10)(a) and (b) of the [1986 c. 45.] Insolvency Act 1986,
“the model
(5)
Regulations under this section are to be made by statutory instrument and may
only be made if a draft has been laid before and approved by resolution of each
House of Parliament.
(6) Making
regulations under this section requires the agreement—
(a) if they extend to
(b) if they extend to
General
15
Amendments of Financial Services and Markets Act 2000 and repeals (1) The enactments mentioned in Schedule 5 are repealed to the
extent specified.
(2) For the
purposes of the [2000 c. 8.] Financial Services and Markets Act 2000, the
functions conferred on the Financial Services Authority by virtue of Schedules
1 and 2 are to be treated as conferred by that Act.
(3) Section
356 of that Act (Authority’s powers to participate in proceedings: company
voluntary arrangements) is amended as follows—
(a) for subsection (1), there is substituted—
“(1) Where a
voluntary arrangement has effect under Part I of the 1986 Act in respect of
(b) for subsection (2), there is substituted—
“(2) Where a
voluntary arrangement has been approved under Part II of the 1989 Order in
respect of
(c) in subsection (3), for “either” there is substituted “any”.
16 Commencement (1) The preceding provisions of this Act (including the
Schedules) are to come into force on such day as the Secretary of State may by
order made by statutory instrument appoint.
(2) Subsection (1) does not
apply to section 14 (which accordingly comes into force on the day on which
this Act is passed).
(3) An order under this section
may make different provision for different purposes and may make—
(a) any
supplementary, incidental or consequential provision, and
(b) any
transitory, transitional or saving provision,
which the
Secretary of State considers necessary or expedient.
17 Extent This Act, except
section 15(3), Part II of Schedule 2 and paragraphs 16(3) and 22 of Schedule 4,
does not extend to
18 Short title This Act may be
cited as the Insolvency Act 2000.
SCHEDULES
Section 1.
SCHEDULE 1
Moratorium where directors propose voluntary
arrangement
Amendments of the Insolvency Act 1986
1 The [1986 c. 45.] Insolvency
Act 1986 is amended as provided in this Schedule.
2 After section 1 there is
inserted—
“1A Moratorium (1) Where the directors of an eligible company intend to make a
proposal for a voluntary arrangement, they may take steps to obtain a
moratorium for the company.
(2) The provisions of Schedule
A1 to this Act have effect with respect to—
(a) companies
eligible for a moratorium under this section,
(b) the
procedure for obtaining such a moratorium,
(c) the
effects of such a moratorium, and
(d) the
procedure applicable (in place of sections 2 to 6 and 7) in relation to the
approval and implementation of a voluntary arrangement where such a moratorium
is or has been in force.”
4 Before Schedule 1 there is
inserted—
SCHEDULE A1
Moratorium where directors propose voluntary
arrangement
Part I
Introductory
Interpretation
“the
beginning of the moratorium” has the meaning given by paragraph 8(1),
“the
date of filing” means the date on which the documents for the time being
referred to in paragraph 7(1) are filed or lodged with the court,
“hire-purchase agreement” includes
a conditional sale agreement, a chattel leasing agreement and a retention of title agreement,
“market
contract” and “market charge” have the meanings given by Part VII of the [1989
c. 40.] Companies Act 1989,
“money market contract” and
“money market charge” have the meanings given by the [S.I. 1995/2049] Financial
Markets and Insolvency (Money Market) Regulations 1995 (“the 1995
regulations”),
“moratorium”
means a moratorium under section 1A,
“the
nominee” includes any person for the time being carrying out the functions of a
nominee under this Schedule,
“related
contract” has the meaning given by the 1995 regulations,
“the
settlement finality regulations” means the [S.I. 1999/2979.] Financial Markets
and Insolvency (Settlement Finality) Regulations 1999,
“system-charge” has the meaning
given by the [S.I. 1996/1469] Financial Markets and Insolvency Regulations
1996.
Eligible companies
2 (1)
(a) it
is excluded from being eligible by virtue of paragraph 4, or
(b) it
falls within sub-paragraph (2).
(2)
(a) it
is an insurance company within the meaning of the [1982 c. 50.] Insurance
Companies Act 1982,
(b) it
is an authorised institution or former authorised institution within the meaning of the [1987 c.
22.] Banking Act 1987,
(c) it is a party to a market
contract, a money market contract or a related contract or any of its property
is subject to a market charge, a money market charge or a system-charge, or
(d) it
is a participant (within the meaning of the settlement finality regulations) or
any of its property is subject to a collateral security charge (within the
meaning of those regulations).
3 (1)
(a) in
the year ending with the date of filing, or
(b) in
the financial year of the company which ended last before that date.
(2) For the purposes of
sub-paragraph (1)—
(a) the
qualifying conditions are met by
(b)
(3) Subsections (4), (5) and (6)
of section 247 of that Act apply for the purposes of this paragraph as they
apply for the purposes of that section.
4 (1)
(a) an
administration order is in force in relation to the company,
(b) the
company is being wound up,
(c) there
is an administrative receiver of the company,
(d) a
voluntary arrangement has effect in relation to the company,
(e) there
is a provisional liquidator of the company,
(f) a
moratorium has been in force for the company at any time during the period of
12 months ending with the date of filing and—
(i) no voluntary arrangement had effect at the time at which the
moratorium came to an end, or
(ii) a
voluntary arrangement which had effect at any time in that period has come to
an end prematurely, or
(g) a voluntary arrangement in
relation to the company which had effect in pursuance of a proposal under
section 1(3) has come to an end prematurely and, during the period of 12 months
ending with the date of filing, an order under section 5(3)(a) has been made.
(2) Sub-paragraph (1)(b) does
not apply to
5 The Secretary of State may by
regulations modify the qualifications for eligibility of
Part II
Obtaining a moratorium
Nominee’s statement
6 (1) Where the directors of
(a) a
document setting out the terms of the proposed voluntary arrangement,
(b) a
statement of the company’s affairs containing—
(i) such particulars of its creditors and of its debts and other
liabilities and of its assets as may be prescribed, and
(ii) such
other information as may be prescribed, and
(c) any
other information necessary to enable the nominee to comply with sub-paragraph
(2) which he requests from them.
(2) The nominee shall submit to
the directors a statement in the prescribed form indicating whether or not, in
his opinion—
(a) the
proposed voluntary arrangement has a reasonable prospect of being approved and
implemented,
(b) the
company is likely to have sufficient funds available to it during the proposed
moratorium to enable it to carry on its business, and
(c) meetings
of the company and its creditors should be summoned to consider the proposed
voluntary arrangement.
(3) In forming his opinion on
the matters mentioned in sub-paragraph (2), the nominee is entitled to rely on
the information submitted to him under sub-paragraph (1) unless he has reason
to doubt its accuracy.
(4) The reference in
sub-paragraph (2)(b) to the company’s business is to
that business as the company proposes to carry it on during the moratorium.
Documents to be submitted to
court
7 (1) To
obtain a moratorium the directors of
(a) a
document setting out the terms of the proposed voluntary arrangement,
(b) a
statement of the company’s affairs containing—
(i) such particulars of its creditors and of its debts and other
liabilities and of its assets as may be prescribed, and
(ii) such
other information as may be prescribed,
(c) a
statement that the company is eligible for a moratorium,
(d) a
statement from the nominee that he has given his consent to act, and
(e) a
statement from the nominee that, in his opinion—
(i) the proposed voluntary arrangement has a reasonable prospect
of being approved and implemented,
(ii) the
company is likely to have sufficient funds available to it during the proposed
moratorium to enable it to carry on its business, and
(iii) meetings
of the company and its creditors should be summoned to consider the proposed
voluntary arrangement.
(2) Each of the statements
mentioned in sub-paragraph (1)(b) to (e), except so
far as it contains the particulars referred to in paragraph (b)(i), must be in the prescribed form.
(3) The reference in
sub-paragraph (1)(e)(ii) to the company’s business is
to that business as the company proposes to carry it on during the moratorium.
(4) The Secretary of State may
by regulations modify the requirements of this paragraph as to the documents
required to be filed (in
Duration of moratorium
8 (1) A moratorium comes into
force when the documents for the time being referred to in paragraph 7(1) are
filed or lodged with the court and references in this Schedule to “the
beginning of the moratorium” shall be construed accordingly.
(2) A moratorium ends at the end
of the day on which the meetings summoned under paragraph 29(1) are first held
(or, if the meetings are held on different days, the later of those days),
unless it is extended under paragraph 32.
(3) If either of those meetings
has not first met before the end of the period of 28 days beginning with the
day on which the moratorium comes into force, the moratorium ends at the end of
the day on which those meetings were to be held (or, if those meetings were
summoned to be held on different days, the later of those days), unless it is
extended under paragraph 32.
(4) If the nominee fails to
summon either meeting within the period required by paragraph 29(1), the
moratorium ends at the end of the last day of that period.
(5) If the moratorium is
extended (or further extended) under paragraph 32, it ends at the end of the
day to which it is extended (or further extended).
(6) Sub-paragraphs (2) to (5) do
not apply if the moratorium comes to an end before the time concerned by virtue
of—
(a) paragraph
25(4) (effect of withdrawal by nominee of consent to act),
(b) an
order under paragraph 26(3), 27(3) or 40 (challenge of actions of nominee or
directors), or
(c) a
decision of one or both of the meetings summoned under paragraph 29.
(7) If the moratorium has not
previously come to an end in accordance with sub-paragraphs (2) to (6), it ends
at the end of the day on which a decision under paragraph 31 to approve a
voluntary arrangement takes effect under paragraph 36.
(8) The Secretary of State may
by order increase or reduce the period for the time
being specified in sub-paragraph (3).
Notification of beginning of
moratorium
9 (1) When a moratorium comes
into force, the directors shall notify the nominee of that fact forthwith.
(2) If the directors without
reasonable excuse fail to comply with sub-paragraph (1), each of them is liable
to imprisonment or a fine, or both.
10 (1) When a moratorium comes
into force, the nominee shall, in accordance with the rules—
(a) advertise
that fact forthwith, and
(b) notify
the registrar of companies, the company and any petitioning creditor of the
company of whose claim he is aware of that fact.
(2) In sub-paragraph (1)(b), “petitioning creditor” means a creditor by whom a
winding-up petition has been presented before the beginning of the moratorium,
as long as the petition has not been dismissed or withdrawn.
(3) If the nominee without
reasonable excuse fails to comply with sub-paragraph (1)(a)
or (b), he is liable to a fine.
Notification of end of
moratorium
11 (1) When a moratorium comes
to an end, the nominee shall, in accordance with the rules—
(a) advertise
that fact forthwith, and
(b) notify
the court, the registrar of companies, the company and any creditor of the
company of whose claim he is aware of that fact.
(2) If the nominee without
reasonable excuse fails to comply with sub-paragraph (1)(a)
or (b), he is liable to a fine.
Part III
Effects of moratorium
Effect on
creditors, etc.
12 (1) During
the period for which a moratorium is in force for
(a) no
petition may be presented for the winding up of the company,
(b) no
meeting of the company may be called or requisitioned except with the consent
of the nominee or the leave of the court and subject (where the court gives
leave) to such terms as the court may impose,
(c) no
resolution may be passed or order made for the winding up of the company,
(d) no
petition for an administration order in relation to the company may be
presented,
(e) no
administrative receiver of the company may be appointed,
(f) no landlord or other person
to whom rent is payable may exercise any right of forfeiture by peaceable
re-entry in relation to premises let to the company in respect of a failure by
the company to comply with any term or condition of its tenancy of such
premises, except with the leave of the court and subject to such terms as the
court may impose,
(g) no other steps may be taken
to enforce any security over the company’s property, or to repossess goods in
the company’s possession under any hire-purchase agreement, except with the
leave of the court and subject to such terms as the court may impose, and
(h) no
other proceedings and no execution or other
(2) Where a petition, other than
an excepted petition, for the winding up of the company has been presented
before the beginning of the moratorium, section 127 shall not apply in relation
to any disposition of property, transfer of shares or alteration in status made
during the moratorium or at a time mentioned in paragraph 37(5)(a).
(3) In the application of
sub-paragraph (1)(h) to Scotland, the reference to execution being commenced or
continued includes a reference to diligence being carried out or continued, and
the reference to distress being levied is omitted.
(4) Paragraph (a) of
sub-paragraph (1) does not apply to an excepted petition and, where such a
petition has been presented before the beginning of the moratorium or is
presented during the moratorium, paragraphs (b) and (c) of that sub-paragraph
do not apply in relation to proceedings on the petition.
(5) For the purposes of this
paragraph, “excepted petition” means a petition under—
(a) section
124A of this Act,
(b) section
72 of the [1986 c. 60.] Financial Services Act 1986 on the ground mentioned in
subsection (1)(b) of that section, or
(c) section
92 of the [1987 c. 22.] Banking Act 1987 on the ground mentioned in subsection
(1)(b) of that section.
13 (1) This
paragraph applies where there is an uncrystallised
floating charge on the property of
(2) If the conditions for the
holder of the charge to give a notice having the effect mentioned in
sub-paragraph (4) are met at any time, the notice may not be given at that time
but may instead be given as soon as practicable after the moratorium has come
to an end.
(3) If any other event occurs at
any time which (apart from this sub-paragraph) would have the effect mentioned
in sub-paragraph (4), then—
(a) the
event shall not have the effect in question at that time, but
(b) if
notice of the event is given to the company by the holder of the charge as soon
as is practicable after the moratorium has come to an end, the event is to be
treated as if it had occurred when the notice was given.
(4) The effect referred to in
sub-paragraphs (2) and (3) is—
(a) causing
the crystallisation of the floating charge, or
(b) causing
the imposition, by virtue of provision in the instrument creating the charge,
of any restriction on the disposal of any property of the company.
(5) Application may not be made
for leave under paragraph 12(1)(g) or (h) with a view
to obtaining—
(a) the
crystallisation of the floating charge, or
(b) the
imposition, by virtue of provision in the instrument creating the charge, of
any restriction on the disposal of any property of the company.
14 Security granted by
Effect on company
15 (1) Paragraphs 16 to 23 apply
in relation to
(2) The fact that
(a) make
the transaction void, or
(b) make
it to any extent unenforceable against the company.
Company invoices, etc.
16 (1) Every
invoice, order for goods or business letter which—
(a) is
issued by or on behalf of the company, and
(b) on
or in which the company’s name appears,
shall also
contain the nominee’s name and a statement that the moratorium is in force for
the company.
(2) If default is made in
complying with sub-paragraph (1), the company and (subject to sub-paragraph
(3)) any officer of the company is liable to a fine.
(3) An officer of the company is
only liable under sub-paragraph (2) if, without reasonable excuse, he authorises or permits the default.
Obtaining credit during
moratorium
17 (1) The
company may not obtain credit to the extent of £250 or more from a person who
has not been informed that a moratorium is in force in relation to the company.
(2) The reference to the company
obtaining credit includes the following cases—
(a) where
goods are bailed (in
(b) where
the company is paid in advance (whether in money or otherwise) for the supply
of goods or services.
(3) Where the company obtains
credit in contravention of sub-paragraph (1)—
(a) the
company is liable to a fine, and
(b) if
any officer of the company knowingly and wilfully authorised or permitted the contravention, he is liable to
imprisonment or a fine, or both.
(4) The money sum specified in
sub-paragraph (1) is subject to increase or reduction by order under section
417A in Part XV.
Disposals and payments
18 (1) Subject to sub-paragraph
(2), the company may only dispose of any of its property if—
(a) there
are reasonable grounds for believing that the disposal will benefit the
company, and
(b) the
disposal is approved by the committee established under paragraph 35(1) or,
where there is no such committee, by the nominee.
(2) Sub-paragraph (1) does not
apply to a disposal made in the ordinary way of the company’s business.
(3) If the company makes a
disposal in contravention of sub-paragraph (1) otherwise than in pursuance of
an order of the court—
(a) the
company is liable to a fine, and
(b) if
any officer of the company authorised or permitted
the contravention, without reasonable excuse, he is liable to imprisonment or a
fine, or both.
19 (1) Subject to sub-paragraph
(2), the company may only make any payment in respect of any debt or other
liability of the company in existence before the beginning of the moratorium
if—
(a) there
are reasonable grounds for believing that the payment will benefit the company,
and
(b) the
payment is approved by the committee established under paragraph 35(1) or,
where there is no such committee, by the nominee.
(2) Sub-paragraph (1) does not
apply to a payment required by paragraph 20(6).
(3) If the company makes a
payment in contravention of sub-paragraph (1) otherwise than in pursuance of an
order of the court—
(a) the
company is liable to a fine, and
(b) if
any officer of the company authorised or permitted
the contravention, without reasonable excuse, he is liable to imprisonment or a
fine, or both.
Disposal of
charged property, etc.
20 (1) This
paragraph applies where—
(a) any
property of the company is subject to a security, or
(b) any
goods are in the possession of the company under a hire-purchase agreement.
(2) If the holder of the
security consents, or the court gives leave, the
company may dispose of the property as if it were not subject to the security.
(3) If the owner of the goods consents, or the court gives leave, the company may dispose
of the goods as if all rights of the owner under the hire-purchase agreement were
vested in the company.
(4) Where property subject to a
security which, as created, was a floating charge is disposed of under
sub-paragraph (2), the holder of the security has the same priority in respect
of any property of the company directly or indirectly representing the property
disposed of as he would have had in respect of the property subject to the
security.
(5) Sub-paragraph (6) applies to
the disposal under sub-paragraph (2) or (as the case may be) sub-paragraph (3)
of—
(a) any
property subject to a security other than a security which, as created, was a
floating charge, or
(b) any
goods in the possession of the company under a hire-purchase agreement.
(6) It shall be a condition of
any consent or leave under sub-paragraph (2) or (as the case may be)
sub-paragraph (3) that—
(a) the
net proceeds of the disposal, and
(b) where those proceeds are
less than such amount as may be agreed, or determined by the court, to be the
net amount which would be realised on a sale of the
property or goods in the open market by a willing vendor, such sums as may be
required to make good the deficiency,
shall be
applied towards discharging the sums secured by the security or payable under
the hire-purchase agreement.
(7) Where a condition imposed in
pursuance of sub-paragraph (6) relates to two or more securities, that
condition requires—
(a) the
net proceeds of the disposal, and
(b) where
paragraph (b) of sub-paragraph (6) applies, the sums mentioned in that
paragraph,
to be
applied towards discharging the sums secured by those securities in the order
of their priorities.
(8) Where the court gives leave
for a disposal under sub-paragraph (2) or (3), the directors shall, within 14
days after leave is given, send an office copy of the order giving leave to the
registrar of companies.
(9) If the directors without
reasonable excuse fail to comply with sub-paragraph (8), they are liable to a
fine.
21 (1) Where property is
disposed of under paragraph
(a) that
document, or
(b) where
any recording, intimation or registration of the document is
has the
effect of disencumbering the property of, or (as the case may be) freeing the
property from, the security.
(2) Where goods in the
possession of the company under a hire-purchase agreement are disposed of under
paragraph
22 (1) If the company—
(a) without
any consent or leave under paragraph 20, disposes of any of its property which
is subject to a security otherwise than in accordance with the terms of the
security,
(b) without
any consent or leave under paragraph 20, disposes of any goods in the
possession of the company under a hire-purchase agreement otherwise than in
accordance with the terms of the agreement, or
(c) fails
to comply with any requirement imposed by paragraph 20 or 21,
it is
liable to a fine.
(2) If any officer of the
company, without reasonable excuse, authorises or
permits any such disposal or failure to comply, he is liable to imprisonment or
a fine, or both.
Market contracts, etc.
23 (1) If the company enters
into any transaction to which this paragraph applies—
(a) the
company is liable to a fine, and
(b) if
any officer of the company, without reasonable excuse, authorised
or permitted the company to enter into the transaction, he is liable to
imprisonment or a fine, or both.
(2)
(a)
enters into a market contract, a money market contract or a related contract,
(b) gives
a transfer order,
(c) grants
a market charge, a money market charge or a system-charge, or
(d) provides
any collateral security.
(3) The fact that
(a) make
the transaction void, or
(b) make
it to any extent unenforceable by or against the company.
(4) Where during the moratorium
(5) Paragraph 20 does not apply
in relation to any property which is subject to a market charge, a money market
charge, a system-charge or a collateral security charge.
(6) In this paragraph, “transfer
order”, “collateral security” and “collateral security charge” have the same
meanings as in the settlement finality regulations.
Part IV
Nominees
Monitoring of company’s activities
24 (1) During
a moratorium, the nominee shall monitor the company’s affairs for the purpose
of forming an opinion as to whether—
(a) the
proposed voluntary arrangement or, if he has received notice of proposed
modifications under paragraph 31(7), the proposed arrangement with those
modifications has a reasonable prospect of being approved and implemented, and
(b) the
company is likely to have sufficient funds available to it during the remainder
of the moratorium to enable it to continue to carry on its business.
(2) The directors shall submit
to the nominee any information necessary to enable him to comply with
sub-paragraph (1) which he requests from them.
(3) In forming his opinion on
the matters mentioned in sub-paragraph (1), the nominee is entitled to rely on
the information submitted to him under sub-paragraph (2) unless he has reason
to doubt its accuracy.
(4) The reference in
sub-paragraph (1)(b) to the company’s business is to
that business as the company proposes to carry it on during the remainder of
the moratorium.
Withdrawal of consent to act
25 (1) The
nominee may only withdraw his consent to act in the circumstances mentioned in
this paragraph.
(2) The nominee must withdraw
his consent to act if, at any time during a moratorium—
(a) he
forms the opinion that—
(i)
the proposed voluntary arrangement or, if he has received notice of proposed
modifications under paragraph 31(7), the proposed arrangement with those
modifications no longer has a reasonable prospect of being approved or
implemented, or
(ii) the
company will not have sufficient funds available to it during the remainder of
the moratorium to enable it to continue to carry on its business,
(b) he
becomes aware that, on the date of filing, the company was not eligible for a
moratorium, or
(c) the
directors fail to comply with their duty under paragraph 24(2).
(3) The reference in
sub-paragraph (2)(a)(ii) to the company’s business is
to that business as the company proposes to carry it on during the remainder of
the moratorium.
(4) If the nominee withdraws his
consent to act, the moratorium comes to an end.
(5) If the nominee withdraws his
consent to act he must, in accordance with the rules, notify the court, the
registrar of companies, the company and any creditor of the company of whose
claim he is aware of his withdrawal and the reason for it.
(6) If the nominee without
reasonable excuse fails to comply with sub-paragraph (5), he is liable to a
fine.
Challenge of nominee’s actions,
etc.
26 (1) If any
creditor, director or member of the company, or any other person affected by a
moratorium, is dissatisfied by any act, omission or decision of the nominee
during the moratorium, he may apply to the court.
(2) An application under
sub-paragraph (1) may be made during the moratorium or after it has ended.
(3) On an application under
sub-paragraph (1) the court may—
(a) confirm,
reverse or modify any act or decision of the nominee,
(b) give
him directions, or
(c) make
such other order as it thinks fit.
(4) An order under sub-paragraph
(3) may (among other things) bring the moratorium to an end and make such
consequential provision as the court thinks fit.
27 (1) Where there are
reasonable grounds for believing that—
(a) as
a result of any act, omission or decision of the nominee during the moratorium,
the company has suffered loss, but
(b) the
company does not intend to pursue any claim it may have against the nominee,
any
creditor of the company may apply to the court.
(2) An application under
sub-paragraph (1) may be made during the moratorium or after it has ended.
(3) On an application under
sub-paragraph (1) the court may—
(a) order
the company to pursue any claim against the nominee,
(b) authorise any creditor to pursue such a claim in the
name of the company, or
(c) make
such other order with respect to such a claim as it thinks fit,
unless the
court is satisfied that the act, omission or decision of the nominee was in all
the circumstances reasonable.
(4) An order under sub-paragraph
(3) may (among other things)—
(a) impose
conditions on any authority given to pursue a claim,
(b) direct
the company to assist in the pursuit of a claim,
(c) make
directions with respect to the distribution of anything received as a result of
the pursuit of a claim,
(d) bring
the moratorium to an end and make such consequential provision as the court
thinks fit.
(5) On an application under
sub-paragraph (1) the court shall have regard to the interests of the members
and creditors of the company generally.
Replacement of nominee by court
28 (1) The
court may—
(a) on
an application made by the directors in a case where the nominee has failed to
comply with any duty imposed on him under this Schedule or has died, or
(b) on
an application made by the directors or the nominee in a case where it is
impracticable or inappropriate for the nominee to continue to act as such,
direct that
the nominee be replaced as such by another person qualified to act as an
insolvency practitioner, or authorised to act as
nominee, in relation to the voluntary arrangement.
(2) A person may only be
appointed as a replacement nominee under this paragraph if he submits to the
court a statement indicating his consent to act.
Part V
Consideration and implementation
of voluntary arrangement
Summoning of meetings
29 (1) Where a moratorium is in
force, the nominee shall summon meetings of the company and its creditors for
such a time, date (within the period for the time being specified in paragraph
8(3)) and place as he thinks fit.
(2) The persons to be summoned
to a creditors' meeting under this paragraph are every creditor of the company
of whose claim the nominee is aware.
Conduct of meetings
30 (1) Subject to the provisions
of paragraphs 31 to 35, the meetings summoned under paragraph 29 shall be
conducted in accordance with the rules.
(2) A meeting so summoned may
resolve that it be adjourned (or further adjourned).
(3) After the conclusion of
either meeting in accordance with the rules, the chairman of the meeting shall
report the result of the meeting to the court, and, immediately after reporting
to the court, shall give notice of the result of the meeting to such persons as
may be prescribed.
Approval of voluntary
arrangement
31 (1) The
meetings summoned under paragraph 29 shall decide whether to approve the
proposed voluntary arrangement (with or without modifications).
(2) The modifications may
include one conferring the functions proposed to be conferred on the nominee on
another person qualified to act as an insolvency practitioner, or authorised to act as nominee, in relation to the voluntary
arrangement.
(3) The modifications shall not
include one by virtue of which the proposal ceases to be a proposal such as is
mentioned in section 1.
(4) A meeting summoned under
paragraph 29 shall not approve any proposal or modification which affects the
right of a secured creditor of the company to enforce his security, except with
the concurrence of the creditor concerned.
(5) Subject to sub-paragraph
(6), a meeting so summoned shall not approve any proposal or modification under
which—
(a) any
preferential debt of the company is to be paid otherwise than in priority to
such of its debts as are not preferential debts, or
(b) a preferential creditor of
the company is to be paid an amount in respect of a preferential debt that
bears to that debt a smaller proportion than is borne to another preferential
debt by the amount that is to be paid in respect of that other debt.
(6) The meeting may approve such
a proposal or modification with the concurrence of the preferential creditor
concerned.
(7) The directors of the company
may, before the beginning of the period of seven days which ends with the
meetings (or either of them) summoned under paragraph 29 being held, give
notice to the nominee of any modifications of the proposal for which the
directors intend to seek the approval of those meetings.
(8) References in this paragraph
to preferential debts and preferential creditors are to be read in accordance
with section
Extension of moratorium
32 (1) Subject to sub-paragraph
(2), a meeting summoned under paragraph 29 which resolves that it be adjourned
(or further adjourned) may resolve that the moratorium be extended (or further
extended), with or without conditions.
(2) The moratorium may not be
extended (or further extended) to
(a) where
both meetings summoned under paragraph 29 are first held on the same day, with
that day,
(b) in
any other case, with the day on which the later of those meetings is first
held.
(3) At any meeting where it is
proposed to extend (or further extend) the moratorium, before a decision is
taken with respect to that proposal, the nominee shall inform the meeting—
(a) of
what he has done in order to comply with his duty under paragraph 24 and the
cost of his actions for the company, and
(b) of
what he intends to do to continue to comply with that duty if the moratorium is
extended (or further extended) and the expected cost of his actions for the
company.
(4) Where, in accordance with
sub-paragraph (3)(b), the nominee informs a meeting of
the expected cost of his intended actions, the meeting shall resolve whether or
not to approve that expected cost.
(5) If a decision not to approve
the expected cost of the nominee’s intended actions has effect under paragraph
36, the moratorium comes to an end.
(6) A meeting may resolve that a
moratorium which has been extended (or further extended) be brought to an end
before the end of the period of the extension (or further extension).
(7) The Secretary of State may
by order increase or reduce the period for the time
being specified in sub-paragraph (2).
33 (1) The conditions which may
be imposed when a moratorium is extended (or further extended) include a
requirement that the nominee be replaced as such by another person qualified to
act as an insolvency practitioner, or authorised to
act as nominee, in relation to the voluntary arrangement.
(2) A person may only be appointed
as a replacement nominee by virtue of sub-paragraph (1) if he submits to the
court a statement indicating his consent to act.
(3) At any meeting where it is
proposed to appoint a replacement nominee as a condition of extending (or
further extending) the moratorium—
(a) the
duty imposed by paragraph 32(3)(b) on the nominee shall instead be imposed on
the person proposed as the replacement nominee, and
(b) paragraphs
32(4) and (5) and 36(1)(e) apply as if the references to the nominee were to
that person.
34 (1) If a decision to extend,
or further extend, the moratorium takes effect under paragraph 36, the nominee
shall, in accordance with the rules, notify the registrar of companies and the
court.
(2) If the moratorium is
extended, or further extended, by virtue of an order under paragraph 36(5), the
nominee shall, in accordance with the rules, send an office copy of the order
to the registrar of companies.
(3) If the nominee without
reasonable excuse fails to comply with this paragraph, he is liable to a fine.
Moratorium committee
35 (1) A meeting summoned under
paragraph 29 which resolves that the moratorium be extended (or further
extended) may, with the consent of the nominee, resolve that a committee be
established to exercise the functions conferred on it by the meeting.
(2) The meeting may not so
resolve unless it has approved an estimate of the expenses to be incurred by
the committee in the exercise of the proposed functions.
(3) Any expenses, not exceeding
the amount of the estimate, incurred by the committee in the exercise of its
functions shall be reimbursed by the nominee.
(4) The committee shall cease to
exist when the moratorium comes to an end.
Effectiveness of decisions
36 (1) Sub-paragraph (2) applies
to references to one of the following decisions having effect, that is, a
decision, under paragraph 31, 32 or 35, with respect to—
(a) the
approval of a proposed voluntary arrangement,
(b) the
extension (or further extension) of a moratorium,
(c) the
bringing of a moratorium to an end,
(d) the
establishment of a committee, or
(e) the
approval of the expected cost of a nominee’s intended actions.
(2) The decision has effect if,
in accordance with the rules—
(a) it
has been taken by both meetings summoned under paragraph 29, or
(b) (subject
to any order made under sub-paragraph (5)) it has been taken by the creditors'
meeting summoned under that paragraph.
(3) If a decision taken by the
creditors' meeting under any of paragraphs 31, 32 or 35 with respect to any of
the matters mentioned in sub-paragraph (1) differs from one so taken by the
company meeting with respect to that matter, a member of the company may apply
to the court.
(4) An application under
sub-paragraph (3) shall not be made after the end of the period of 28 days
beginning with—
(a) the
day on which the decision was taken by the creditors' meeting, or
(b) where
the decision of the company meeting was taken on a later day, that day.
(5) On an application under
sub-paragraph (3), the court may—
(a) order
the decision of the company meeting to have effect instead of the decision of
the creditors' meeting, or
(b) make
such other order as it thinks fit.
Effect of approval of voluntary
arrangement
37 (1) This
paragraph applies where a decision approving a voluntary arrangement has effect
under paragraph 36.
(2) The approved voluntary
arrangement—
(a) takes
effect as if made by the company at the creditors' meeting, and
(b) binds
every person who in accordance with the rules—
(i) was entitled to vote at that meeting (whether or not he was
present or represented at it), or
(ii) would
have been so entitled if he had had notice of it,
as if he
were a party to the voluntary arrangement.
(3) If—
(a) when the arrangement ceases
to have effect any amount payable under the arrangement to a person bound by
virtue of sub-paragraph (2)(b)(ii) has not been paid, and
(b) the
arrangement did not come to an end prematurely,
the
company shall at that time become liable to pay to that person the amount
payable under the arrangement.
(4) Where a petition for the
winding up of the company, other than an excepted petition within the meaning
of paragraph 12, was presented before the beginning of the moratorium, the
court shall dismiss the petition.
(5) The court shall not dismiss
a petition under sub-paragraph (4)—
(a) at any time before the end
of the period of 28 days beginning with the first day on which each of the
reports of the meetings required by paragraph 30(3) has been made to the court,
or
(b) at
any time when an application under paragraph 38 or an appeal in respect of such
an application is pending, or at any time in the period within which such an
appeal may be brought.
Challenge of decisions
38 (1) Subject to the following
provisions of this paragraph, any of the persons mentioned in sub-paragraph (2)
may apply to the court on one or both of the following grounds—
(a) that a voluntary arrangement
approved at one or both of the meetings summoned under paragraph 29 and which
has taken effect unfairly prejudices the interests of a creditor, member or
contributory of the company,
(b) that
there has been some material irregularity at or in relation to either of those
meetings.
(2) The persons who may apply
under this paragraph are—
(a) a
person entitled, in accordance with the rules, to vote at either of the
meetings,
(b) a
person who would have been entitled, in accordance with the rules, to vote at
the creditors' meeting if he had had notice of it, and
(c) the
nominee.
(3) An application under this
paragraph shall not be made—
(a) after the end of the period
of 28 days beginning with the first day on which each of the reports required
by paragraph 30(3) has been made to the court, or
(b) in the case of a person who
was not given notice of the creditors' meeting, after the end of the period of
28 days beginning with the day on which he became aware that the meeting had
taken place,
but
(subject to that) an application made by a person within sub-paragraph (2)(b)
on the ground that the arrangement prejudices his interests may be made after
the arrangement has ceased to have effect, unless it came to an end
prematurely.
(4) Where on an application
under this paragraph the court is satisfied as to either of the grounds
mentioned in sub-paragraph (1), it may do any of the following—
(a) revoke
or suspend—
(i) any decision approving the voluntary arrangement which has
effect under paragraph 36, or
(ii) in
a case falling within sub-paragraph (1)(b), any decision taken by the meeting
in question which has effect under that paragraph,
(b) give
a direction to any person—
(i) for the summoning of further meetings to consider any
revised proposal for a voluntary arrangement which the directors may make, or
(ii) in
a case falling within sub-paragraph (1)(b), for the summoning of a further
company or (as the case may be) creditors' meeting to reconsider the original
proposal.
(5) Where at any time after
giving a direction under sub-paragraph (4)(b)(i) the
court is satisfied that the directors do not intend to submit a revised
proposal, the court shall revoke the direction and revoke or suspend any
decision approving the voluntary arrangement which has effect under paragraph
36.
(6) Where the court gives a
direction under sub-paragraph (4)(b), it may also give a direction continuing
or, as the case may require, renewing, for such period as may be specified in
the direction, the effect of the moratorium.
(7) Sub-paragraph (8) applies in
a case where the court, on an application under this paragraph—
(a)
gives a direction under sub-paragraph (4)(b), or
(b) revokes
or suspends a decision under sub-paragraph (4)(a) or (5).
(8) In such a case, the court
may give such supplemental directions as it thinks fit and, in particular,
directions with respect to—
(a) things
done under the voluntary arrangement since it took effect, and
(b) such
things done since that time as could not have been done if a moratorium had
been in force in relation to the company when they were done.
(9) Except in pursuance of the
preceding provisions of this paragraph, a decision taken at a meeting summoned
under paragraph 29 is not invalidated by any irregularity at or in relation to
the meeting.
Implementation of voluntary
arrangement
39 (1) This
paragraph applies where a voluntary arrangement approved by one or both of the
meetings summoned under paragraph 29 has taken effect.
(2) The person who is for the
time being carrying out in relation to the voluntary arrangement the functions
conferred—
(a) by
virtue of the approval of the arrangement, on the nominee, or
(b) by
virtue of paragraph 31(2), on a person other than the nominee,
shall be
known as the supervisor of the voluntary arrangement.
(3) If any of the company’s
creditors or any other person is dissatisfied by any act, omission or decision
of the supervisor, he may apply to the court.
(4) On an application under
sub-paragraph (3) the court may—
(a) confirm,
reverse or modify any act or decision of the supervisor,
(b) give
him directions, or
(c) make
such other order as it thinks fit.
(5) The supervisor—
(a) may
apply to the court for directions in relation to any particular matter arising
under the voluntary arrangement, and
(b) is
included among the persons who may apply to the court for the winding up of the
company or for an administration order to be made in relation to it.
(6) The court may, whenever—
(a) it
is expedient to appoint a person to carry out the functions of the supervisor,
and
(b) it
is inexpedient, difficult or impracticable for an appointment to be made
without the assistance of the court,
make an
order appointing a person who is qualified to act as an insolvency
practitioner, or authorised to act as supervisor, in
relation to the voluntary arrangement, either in substitution for the existing
supervisor or to fill a vacancy.
(7) The power conferred by
sub-paragraph (6) is exercisable so as to increase the number of persons
exercising the functions of supervisor or, where there is more than one person
exercising those functions, so as to replace one or more of those persons.
Part VI
Miscellaneous
Challenge of directors' actions
40 (1) This
paragraph applies in relation to acts or omissions of the directors of
(2) A creditor or member of the
company may apply to the court for an order under this paragraph on the ground—
(a) that the company’s affairs,
business and property are being or have been managed by the directors in a
manner which is unfairly prejudicial to the interests of its creditors or
members generally, or of some part of its creditors or members (including at
least the petitioner), or
(b) that
any actual or proposed act or omission of the directors is or would be so
prejudicial.
(3) An application for an order
under this paragraph may be made during or after the moratorium.
(4) On an application for an
order under this paragraph the court may—
(a) make
such order as it thinks fit for giving relief in respect of the matters
complained of,
(b) adjourn
the hearing conditionally or unconditionally, or
(c) make
an interim order or any other order that it thinks fit.
(5) An order under this
paragraph may in particular—
(a) regulate
the management by the directors of the company’s affairs, business and property
during the remainder of the moratorium,
(b) require the directors to
refrain from doing or continuing an act complained of by the petitioner, or to
do an act which the petitioner has complained they have omitted to do,
(c) require
the summoning of a meeting of creditors or members for the purpose of
considering such matters as the court may direct,
(d) bring
the moratorium to an end and make such consequential provision as the court
thinks fit.
(6) In making an order under
this paragraph the court shall have regard to the need to safeguard the interests
of persons who have dealt with the company in good faith and for value.
(7) In relation to any time when
an administration order is in force in relation to the company, or the company
is being wound up, in pursuance of a petition presented before the moratorium
came into force, no application for an order under this paragraph may be made
by a creditor or member of the company; but such an application may be made
instead by the administrator or (as the case may be) liquidator.
Offences
41 (1) This
paragraph applies where a moratorium has been obtained for a company.
(2) If, within the period of 12
months ending with the day on which the moratorium came into force, a person
who was at the time an officer of the company—
(a) did
any of the things mentioned in paragraphs (a) to (f) of sub-paragraph (4), or
(b) was
privy to the doing by others of any of the things mentioned in paragraphs (c),
(d) and (e) of that sub-paragraph,
he is to
be treated as having committed an offence at that time.
(3) If, at any time during the
moratorium, a person who is an officer of the company—
(a) does
any of the things mentioned in paragraphs (a) to (f) of sub-paragraph (4), or
(b) is
privy to the doing by others of any of the things mentioned in paragraphs (c),
(d) and (e) of that sub-paragraph,
he
commits an offence.
(4) Those things are—
(a) concealing
any part of the company’s property to the value of £500 or more, or concealing
any debt due to or from the company, or
(b) fraudulently
removing any part of the company’s property to the value of £500 or more, or
(c) concealing, destroying,
mutilating or falsifying any book or paper affecting or relating to the
company’s property or affairs, or
(d) making
any false entry in any book or paper affecting or relating to the company’s
property or affairs, or
(e) fraudulently parting with,
altering or making any omission in any document affecting or relating to the
company’s property or affairs, or
(f) pawning,
pledging or disposing of any property of the company which has been obtained on
credit and has not been paid for (unless the pawning, pledging or disposal was
in the ordinary way of the company’s business).
(5) For the purposes of this
paragraph, “officer” includes a shadow director.
(6) It is a defence—
(a) for a person charged under
sub-paragraph (2) or (3) in respect of the things mentioned in paragraph (a) or
(f) of sub-paragraph (4) to prove that he had no intent to defraud, and
(b) for
a person charged under sub-paragraph (2) or (3) in respect of the things
mentioned in paragraph (c) or (d) of sub-paragraph (4) to prove that he had no
intent to conceal the state of affairs of the company or to defeat the law.
(7) Where a person pawns,
pledges or disposes of any property of
(a) would, if a moratorium were
obtained for the company within the period of 12 months beginning with the day
on which the pawning, pledging or disposal took place, amount to an offence
under sub-paragraph (2), or
(b) amount
to an offence under sub-paragraph (3),
commits an
offence.
(8) A person guilty of an
offence under this paragraph is liable to imprisonment or a fine, or both.
(9) The money sums specified in
paragraphs (a) and (b) of sub-paragraph (4) are subject to increase or
reduction by order under section 417A in Part XV.
42 (1) If, for the purpose of
obtaining a moratorium, or an extension of a moratorium, for
(a) makes
any false representation, or
(b) fraudulently
does, or omits to do, anything,
he
commits an offence.
(2) Sub-paragraph (1) applies
even if no moratorium or extension is obtained.
(3) For the purposes of this
paragraph, “officer” includes a shadow director.
(4) A person guilty of an
offence under this paragraph is liable to imprisonment or a fine, or both.
Void provisions in floating
charge documents
43 (1) A provision in an
instrument creating a floating charge is void if it provides for—
(a) obtaining
a moratorium, or
(b) anything
done with a view to obtaining a moratorium (including any preliminary decision
or investigation),
to be an event causing the
floating charge to crystallise or causing
restrictions which would not otherwise apply to be imposed on the disposal of
property by the company or a ground for the appointment of a receiver.
(2) In sub-paragraph (1),
“receiver” includes a manager and a person who is appointed both receiver and
manager.
Functions of the Financial
Services Authority
44 (1) This Schedule has effect
in relation to a moratorium for a regulated company with the modifications in sub-paragraphs (2) to (16) below.
(2) Any notice or other document
required by virtue of this Schedule to be sent to a creditor of a regulated
company must also be sent to the Authority.
(3) The Authority is entitled to
be heard on any application to the court for leave under paragraph 20(2) or
20(3) (disposal of charged property, etc.).
(4) Where paragraph 26(1) (challenge
of nominee’s actions, etc.) applies, the persons who may apply to the court
include the Authority.
(5) If a person other than the Authority
applies to the court under that paragraph, the Authority is entitled to be
heard on the application.
(6) Where paragraph 27(1) (challenge
of nominee’s actions, etc.) applies, the persons who may apply to the court
include the Authority.
(7) If a person other than the
Authority applies to the court under that paragraph, the Authority is entitled
to be heard on the application.
(8) The persons to be summoned to a
creditors' meeting under paragraph 29 include the Authority.
(9) A person appointed for the purpose
by the Authority is entitled to attend and participate in (but not to vote at)—
(a) any creditors' meeting summoned under that
paragraph,
(b) any meeting of a committee established under
paragraph 35 (moratorium committee).
(10) The Authority is entitled to be
heard on any application under paragraph 36(3) (effectiveness of decisions).
(11) Where paragraph 38(1) (challenge
of decisions) applies, the persons who may apply to the court include the
Authority.
(12) If a person other than the Authority
applies to the court under that paragraph, the Authority is entitled to be
heard on the application.
(13) Where paragraph 39(3)
(implementation of voluntary arrangement) applies, the persons who may apply to
the court include the Authority.
(14) If a person other than the
Authority applies to the court under that paragraph, the Authority is entitled
to be heard on the application.
(15) Where paragraph 40(2) (challenge
of directors' actions) applies, the persons who may apply to the court include the
Authority.
(16) If a person other than the
Authority applies to the court under that paragraph, the Authority is entitled
to be heard on the application.
(17) This paragraph does not prejudice
any right the Authority has (apart from this paragraph) as a creditor of a
regulated company.
(18) In this paragraph—
·
“the Authority” means the
Financial Services Authority, and
·
“regulated company” means
(a)
is, or has been, an authorised person within the
meaning given by section 31 of the [2000 c. 8.] Financial
Services and Markets Act 2000,
(b)
is, or has been, an appointed representative within the meaning given by
section 39 of that Act, or
(c)
is carrying on, or has carried on, a regulated activity, within the meaning
given by section 22 of that Act, in contravention of the general prohibition
within the meaning given by section 19 of that Act.
Subordinate
legislation
45 (1) Regulations
or an order made by the Secretary of State under this Schedule may make
different provision for different cases.
(2) Regulations so made may make such
consequential, incidental, supplemental and transitional provision as may
appear to the Secretary of State necessary or expedient.
(3) Any power of the Secretary of
State to make regulations under this Schedule may be exercised by amending or
repealing any enactment contained in this Act (including one contained in this
Schedule) or contained in the [1986 c. 46.]
Company
Directors Disqualification Act 1986.
(4) Regulations (except regulations
under paragraph 5) or an order made by the Secretary of State under this
Schedule shall be made by statutory instrument subject to annulment in
pursuance of a resolution of either House of Parliament.
(5) Regulations under paragraph 5 of
this Schedule are to be made by statutory instrument and shall only be made if
a draft containing the regulations has been laid before and approved
by resolution of each House of Parliament.”
“(fa) at the time at which a moratorium
for the company under section 1A comes to an end, no voluntary arrangement
approved under Part I has effect in relation to the company”.
“(3A) A winding-up petition on the
ground set out in section 122(1)(fa)
may only be presented by one or more creditors”.
8 (1) Section 233
(conditions which may be imposed on supply of gas, water, electricity, etc.) is
amended as follows.
(2) In subsection (1)—
(a) after paragraph (b) there is inserted—
“(ba) a moratorium under section 1A is
in force, or”,
(b) in paragraph (c), for the words from “under Part I” to
“section
(c) after “receiver” (in the second place) there is inserted
“the nominee,”.
(3) In subsection (4)—
(a) after paragraph (b) there is inserted—
“(ba) the date on which the moratorium came into
force”, and
(b) in paragraph (c), for the words following
“arrangement” there is substituted “took effect”.
“(2A) For the purposes of paragraph 31 of Schedule A1
(meetings to consider company voluntary arrangement where a moratorium under
section 1A is in force), the relevant date in relation to
10 After section 417 there is inserted—
“417A Money sums (company moratorium)
(1) The Secretary of State may by
order increase or reduce any of the money sums for the time being specified in
the following provisions of Schedule A1 to this Act—
·
paragraph 17(1) (maximum
amount of credit which company may obtain without disclosure of moratorium);
·
paragraph 41(4) (minimum value of company property concealed or fraudulently
removed, affecting criminal liability of company’s officer).
(2) An order under this section may
contain such transitional provisions as may appear to the Secretary of State
necessary or expedient.
(3) An order under this section shall
be made by statutory instrument subject to annulment in pursuance of a
resolution of either House of Parliament.”
“Sch. A1, para. 9(2). |
Directors failing to notify nominee of beginning of
moratorium. |
1. On indictment. 2. Summary. |
2 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 10(3). |
Nominee failing to advertise or notify beginning of
moratorium. |
Summary. |
One-fifth of the statutory maximum. |
Sch. A1, para. 11(2). |
Nominee failing to advertise or notify end of
moratorium. |
Summary. |
One-fifth of the statutory maximum. |
Sch. A1, para. 16(2). |
Company and officers failing to state in
correspondence etc. that moratorium in force. |
Summary. |
One-fifth of the statutory maximum. |
Sch. A1, para. 17(3)(a). |
Company obtaining credit without disclosing
existence of moratorium. |
1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
Sch. A1, para. 17(3)(b). |
Obtaining credit for company without disclosing
existence of moratorium. |
1. On indictment. 2. Summary. |
2 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 18(3)(a). |
Company disposing of property otherwise than in
ordinary way of business. |
1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
Sch. A1, para. 18(3)(b). |
Authorising
or permitting disposal of company property. |
1. On indictment. 2. Summary. |
2 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 19(3)(a). |
Company making payments in respect of liabilities
existing before beginning of moratorium. |
1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
Sch. A1, para. 19(3)(b). |
Authorising
or permitting such a payment. |
1. On indictment. 2. Summary. |
2 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 20(9). |
Directors failing to send to registrar office copy
of court order permitting disposal of charged property. |
Summary. |
One-fifth of the statutory maximum. |
Sch. A1, para. 22(1). |
Company disposing of charged property. |
1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
Sch. A1, para. 22(2). |
Authorising
or permitting such a disposal. |
1. On indictment. 2. Summary. |
2 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 23(1)(a). |
Company entering into market contract, etc. |
1. On indictment. 2. Summary. |
A fine. The statutory maximum. |
Sch. A1, para. 23(1)(b). |
Authorising
or permitting company to do so. |
1. On indictment. 2. Summary. |
2 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 25(6). |
Nominee failing to give notice of withdrawal of
consent to act. |
Summary. |
One-fifth of the statutory maximum. |
Sch. A1, para. 34(3). |
Nominee failing to give notice of extension of
moratorium. |
Summary. |
One-fifth of the statutory maximum. |
Sch. A1, para. 41(2). |
Fraud or privity to fraud
in anticipation of moratorium. |
1. On indictment. 2. Summary. |
7 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 41(3). |
Fraud or privity to fraud
during moratorium. |
1. On indictment. 2. Summary. |
7 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 41(7). |
Knowingly taking in pawn or pledge, or otherwise
receiving, company property. |
1. On indictment. 2. Summary. |
7 years or a fine, or both. 6 months or the statutory maximum, or both. |
Sch. A1, para. 42(1). |
False representation or fraud for purpose of
obtaining or extending moratorium. |
1. On indictment. 2. Summary. |
7 years or a fine, or both. 6 months or the statutory maximum, or both.” |
SCHEDULE 2
Company voluntary arrangements
Part I
Amendments of the Insolvency Act 1986
1 The [1986 c. 45.] Insolvency
Act 1986 is amended as follows.
(a) in
subsection (2)(a), at the beginning there is inserted—
“whether,
in his opinion, the proposed voluntary arrangement has a reasonable prospect of
being approved and implemented,
(aa)”.
(b) for
subsection (4) there is substituted—
“(4) The court may—
(a) on an application made by
the person intending to make the proposal, in a case where the nominee has
failed to submit the report required by this section or has died, or
(b) on
an application made by that person or the nominee, in a case where it is
impracticable or inappropriate for the nominee to continue to act as such,
direct that
the nominee be replaced as such by another person qualified to act as an
insolvency practitioner, or authorised to act as
nominee, in relation to the voluntary arrangement.”
5 After section 4 there is
inserted—
“4A Approval of arrangement (1) This section applies to a decision, under section 4, with
respect to the approval of a proposed voluntary arrangement.
(2) The decision has effect if,
in accordance with the rules—
(a) it
has been taken by both meetings summoned under section 3, or
(b) (subject
to any order made under subsection (4)) it has been taken by the creditors'
meeting summoned under that section.
(3) If the decision taken by the
creditors' meeting differs from that taken by the company meeting, a member of
the company may apply to the court.
(4) An application under
subsection (3) shall not be made after the end of the period of 28 days
beginning with—
(a) the
day on which the decision was taken by the creditors' meeting, or
(b) where
the decision of the company meeting was taken on a later day, that day.
(5) Where a member of a
regulated company, within the meaning given by paragraph 44 of Schedule A1,
applies to the court under subsection (3), the Financial Services Authority is
entitled to be heard on the application.
(6) On an application under
subsection (3), the court may—
(a) order
the decision of the company meeting to have effect instead of the decision of
the creditors' meeting, or
(b) make
such other order as it thinks fit.”
(a) for
subsection (1) there is substituted—
“(1) This section applies where
a decision approving a voluntary arrangement has effect under section 4A.”,
(b) in
subsections (2) and (3), “approved” is omitted,
(c) in
subsection (2), for paragraph (b) there is substituted—
“(b) binds
every person who in accordance with the rules—
(i) was entitled to vote at that meeting (whether or not he was
present or represented at it), or
(ii) would
have been so entitled if he had had notice of it,
as if he
were a party to the voluntary arrangement.
(2A) If—
(a) when the arrangement ceases to
have effect any amount payable under the arrangement to a person bound by
virtue of subsection (2)(b)(ii) has not been paid, and
(b) the
arrangement did not come to an end prematurely,
the
company shall at that time become liable to pay to that person the amount
payable under the arrangement.”
7 (1) Section 6 (challenge of
decisions) is amended as follows.
(2) In subsection (1)(a), for “approved at the meetings summoned under section
(3) In subsection (2), after
paragraph (a) there is inserted—
“(aa) a person who would have been entitled, in
accordance with the rules, to vote at the creditors' meeting if he had had
notice of it”.
(4) In subsection (3)—
(a) after
“be made” there is inserted “(a)”,
(b) at
the end there is inserted “or
(b) in the case of a person who
was not given notice of the creditors' meeting, after the end of the period of
28 days beginning with the day on which he became aware that the meeting had
taken place,
but (subject to that) an
application made by a person within subsection (2)(aa)
on the ground that the voluntary arrangement prejudices his interests may be
made after the arrangement has ceased to have effect, unless it came to an end
prematurely.”
(5) In subsection (4)(a)—
(a) for
“the approvals given by the meetings” there is substituted “any decision
approving the voluntary arrangement which has effect under section 4A”,
(b) for
“approval given by the meeting in question” there is substituted “decision taken
by the meeting in question which has effect under that section”.
(6) In subsection (5), for
“approval given at the previous meetings” there is substituted “decision
approving the voluntary arrangement which has effect under section 4A”.
(7) In subsection (6), for the
words from “since” to the end there is substituted “under the voluntary
arrangement since it took effect”.
(8) In subsection (7), for “an
approval given” there is substituted “a decision taken”.
8 After that section there is
inserted—
“6A False representations, etc
(1) If, for the purpose of obtaining the approval of the members or creditors
of
(a) makes
any false representation, or
(b) fraudulently
does, or omits to do, anything,
he
commits an offence.
(2) Subsection (1) applies even
if the proposal is not approved.
(3) For purposes of this section
“officer” includes a shadow director.
(4) A person guilty of an
offence under this section is liable to imprisonment or a fine, or both.”
(a) in
subsection (1), for the words following “voluntary arrangement” there is
substituted “has effect under section 4A”,
(b) in
subsection (2), for paragraph (a) there is substituted—
“(a) on the nominee by virtue of
the approval given at one or both of the meetings summoned under section
(c) in
subsection (5), for “in relation to the company” there is substituted “or authorised to act as supervisor, in relation to the
voluntary arrangement”.
10 After that section there is
inserted—
“7A Prosecution of delinquent
officers of company (1) This section applies where a
moratorium under section 1A has been obtained for
(2) If it appears to the nominee
or supervisor that any past or present officer of the company has been guilty
of any offence in connection with the moratorium or, as the case may be,
voluntary arrangement for which he is criminally liable, the nominee or
supervisor shall forthwith—
(a) report
the matter to the appropriate authority, and
(b) provide the appropriate
authority with such information and give the authority such access to and
facilities for inspecting and taking copies of documents (being information or
documents in the possession or under the control of the nominee or supervisor
and relating to the matter in question) as the authority requires.
In this subsection, “the
appropriate authority” means—
(i)in the case of
(ii)in
the case of
(3) Where a report is made to
the Secretary of State under subsection (2), he may, for the purpose of
investigating the matter reported to him and such other matters relating to the
affairs of the company as appear to him to require investigation, exercise any
of the powers which are exercisable by inspectors appointed under section 431
or 432 of the Companies Act to investigate
(4) For the purpose of such an
investigation any obligation imposed on a person by any provision of the
Companies Act to produce documents or give information to, or otherwise to
assist, inspectors so appointed is to be regarded as an obligation similarly to
assist the Secretary of State in his investigation.
(5) An answer given by a person
to a question put to him in exercise of the powers conferred by subsection (3)
may be used in evidence against him.
(6) However, in criminal
proceedings in which that person is charged with an offence to which this
subsection applies—
(a) no
evidence relating to the answer may be adduced, and
(b) no
question relating to it may be asked,
by or on
behalf of the prosecution, unless evidence relating to it is adduced, or a
question relating to it is asked, in the proceedings by or on behalf of that
person.
(7) Subsection (6) applies to
any offence other than—
(a) an
offence under section 2 or 5 of the [1911 c. 6.] Perjury Act 1911 (false
statements made on oath otherwise than in judicial proceedings or made
otherwise than on oath), or
(b) an
offence under section 44(1) or (2) of the [1995 c. 39.] Criminal Law (Consolidation)
(
(8) Where a prosecuting
authority institutes criminal proceedings following any report under subsection
(2), the nominee or supervisor, and every officer and agent of the company past
and present (other than the defendant or defender), shall give the authority
all assistance in connection with the prosecution which he is reasonably able
to give.
For this purpose—
“agent”
includes any banker or solicitor of the company and any person employed by the
company as auditor, whether that person is or is not an officer of the company,
“prosecuting
authority” means the Director of Public Prosecutions, the Lord Advocate or the
Secretary of State.
(9) The court may, on the application
of the prosecuting authority, direct any person referred to in subsection (8)
to comply with that subsection if he has failed to do so.
7B Arrangements coming to an end
prematurely For the purposes of this Part, a voluntary arrangement the approval
of which has taken effect under section 4A or paragraph 36 of Schedule A1 comes
to an end prematurely if, when it ceases to have effect, it has not been fully
implemented in respect of all persons bound by the arrangement by virtue of
section 5(2)(b)(i) or, as the case may be, paragraph
37(2)(b)(i) of Schedule A1.”
“6A(1).
False representation or fraud for purpose of obtaining
members' or creditors' approval of proposed voluntary arrangement. 1. On indictment.
2. Summary.
7 years or a fine, or both.
6 months or the
statutory maximum, or both.”
Part II
Amendments of the Building
Societies Act 1986
13 (1) The Commission may
appoint one or more competent persons to investigate and report on any matter
reported to the Commission under section 7A(2) of the
[1986 c. 45.] Insolvency Act 1986; and section 55 of the
[1986 c. 53.] Building Societies Act 1986 (investigations) applies to
such a person and the investigations as it applies to a person appointed under
section 55(1) and an investigation under that section.
(2) Section 57(5) to (5B) of
that Act (use in evidence of answers given to questions) applies to answers
given under section 55(3) as extended by sub-paragraph (1) as it applies to
answers given under section 57.
14 (1) Schedule
15A to the [1986 c. 53.] Building Societies Act 1986
(application of companies insolvency legislation to building societies) is
amended as follows.
(2) In paragraph 1(2)(a), after “Parts I” there is inserted “(except section
1A)”.
(3) At the end of paragraph 8
there is inserted—
“and
subsection (1) of section 2 shall have effect with the omission of the words
from “and the directors” to the end.
8A In subsection (2) of section
4A of the Act (approval of arrangement) as applied to a building society,
paragraph (b) and the word “or” immediately preceding that paragraph are
omitted.”
(4) After paragraph 9 there is
inserted—
“9A In
section 7A of the Act (prosecution of delinquent officers) as applied to a building
society—
(a) in
subsection (2), for paragraphs (i) and (ii) there is
substituted “the Commission”,
(b) subsections
(3) to (7) are omitted,
(c) in
subsection (8), for “Secretary of State” there is substituted “Commission”.”
SCHEDULE 3
Individual voluntary
arrangements
1 The Insolvency Act 1986 is amended as follows.
(a) in subsection (2)(a), after “with,” there is inserted—
“(aa) no landlord or other person to
whom rent is payable may exercise any right of forfeiture by peaceable re-entry
in relation to premises let to the debtor in respect of a failure by the debtor
to comply with any term or condition of his tenancy of such premises, except
with the leave of the court”,
(b) in subsection (2)(b), after “continued” there is
inserted “and no distress may be levied”.
(a) in subsection (1), after “proposal” there is inserted
“under this Part, that is, a proposal”,
(b) at the end of subsection (2) there is inserted “and
the nominee must be a person who is qualified to act as an insolvency
practitioner, or authorised to act as nominee, in
relation to the voluntary arrangement”,
(c) in subsection (4), for the words from “his proposal”
to “arrangement)” there is substituted “the proposal”.
(a) after “pending” there is inserted—
“(a) no landlord or other person to
whom rent is payable may exercise any right of forfeiture by peaceable re-entry
in relation to premises let to the debtor in respect of a failure by the debtor
to comply with any term or condition of his tenancy of such premises, except
with the leave of the court, and (b)”,
(b) after “may” there is inserted—
“forbid the levying of any distress on the debtor’s
property or its subsequent sale, or both, and”.
(a) in paragraph (a), for “such a proposal as is mentioned
in that section” there is substituted “a proposal under this Part”,
(b) in paragraph (d), the words from “to his creditors” to
“to the debtor, and” are omitted.
(a) in subsection (1)(a), at the beginning there is
inserted—
“whether, in his opinion, the voluntary arrangement which
the debtor is proposing has a reasonable prospect of being approved and
implemented,
(aa)”.
(b) for subsection (3) there is substituted—
“(3) The court may—
(a) on an application made by the debtor in a case
where the nominee has failed to submit the report required by this section or
has died, or
(b) on an application made by the debtor or the
nominee in a case where it is impracticable or inappropriate for the nominee to
continue to act as such,
direct that the nominee shall be
replaced as such by another person qualified to act as an insolvency
practitioner, or authorised to act as nominee, in
relation to the voluntary arrangement.
(3A) The court may, on an application
made by the debtor in a case where the nominee has failed to submit the report
required by this section, direct that the interim order shall continue, or (if
it has ceased to have effect) be renewed, for such further period as the court
may specify in the direction.”
7 After section 256 there is inserted—
“Procedure where no interim
order made
256A Debtor’s proposal and
nominee’s report
(1) This section applies where a
debtor (being an individual)—
(a) intends to make a proposal under
this Part (but an interim order has not been made in relation to the proposal
and no application for such an order is pending), and
(b) if he is an undischarged
bankrupt, has given notice of the proposal to the official receiver and, if
there is one, the trustee of his estate,
unless a bankruptcy petition
presented by the debtor is pending and the court has, under section 273,
appointed an insolvency practitioner to inquire into the debtor’s affairs and
report.
(2) For the purpose of enabling the
nominee to prepare a report to the court, the debtor shall submit to the
nominee—
(a) a document setting out the terms of the
voluntary arrangement which the debtor is proposing, and
(b) a statement of his affairs containing—
(i) such particulars of his creditors and of his
debts and other liabilities and of his assets as may be prescribed, and
(ii) such other information as may be prescribed.
(3) If the nominee is of the opinion
that the debtor is an undischarged bankrupt, or is
able to petition for his own bankruptcy, the nominee shall, within 14 days (or
such longer period as the court may allow) after receiving the document and
statement mentioned in subsection (2), submit a report to the court stating—
(a) whether, in his opinion, the voluntary arrangement
which the debtor is proposing has a reasonable prospect of being approved and
implemented,
(b) whether, in his opinion, a meeting of the debtor’s
creditors should be summoned to consider the debtor’s proposal, and
(c) if in his opinion such a meeting should be
summoned, the date on which, and time and place at which, he proposes the
meeting should be held.
(4) The court may—
(a) on an application made by the debtor in a case
where the nominee has failed to submit the report required by this section or
has died, or
(b) on an application made by the debtor or the
nominee in a case where it is impracticable or inappropriate for the nominee to
continue to act as such,
direct that the nominee shall be
replaced as such by another person qualified to act as an insolvency
practitioner, or authorised to act as nominee, in
relation to the voluntary arrangement.
(5) The court may, on an application
made by the nominee, extend the period within which the nominee is to submit
his report.
Creditors'
meeting”
(a) after “
(b) for “256(3)(a)” there is substituted “256(3) or
256A(4)”.
“(b) binds every person who in accordance with the
rules—
(i) was entitled to vote at the meeting (whether or
not he was present or represented at it), or
(ii) would have been so entitled if he had had notice
of it,
as if he were a party to the
arrangement.
(2A) If—
(a) when the arrangement ceases to
have effect any amount payable under the arrangement to a person bound by
virtue of subsection (2)(b)(ii) has not been paid, and
(b) the arrangement did not come to an end
prematurely,
the debtor shall at that time
become liable to pay to that person the amount payable under the arrangement.”
11 (1) In section 262
(challenge of meeting’s decision), in subsection (2)—
(a) for paragraph (b) there is substituted—
“(b) a person who—
(i) was entitled, in accordance with the rules,
to vote at the creditors' meeting, or
(ii) would have been so entitled if he had had notice
of it”,
(b) in paragraph (c), for “256(3)(a)” there is substituted
“256(3), 256A(4)”.
(2) In subsection (3) of that section—
(a) after “be made” there is inserted “(a)”,
(b) at the end there is inserted “or
(b) in the case of a person who was
not given notice of the creditors' meeting, after the end of the period of 28
days beginning with the day on which he became aware that the meeting had taken
place,
but (subject to
that) an application made by a person within subsection (2)(b)(ii) on the
ground that the arrangement prejudices his interests may be made after the
arrangement has ceased to have effect, unless it has come to an end
prematurely.”
12 After that section there is inserted—
“262A False representations etc
(1) If for the purpose of obtaining
the approval of his creditors to a proposal for a voluntary arrangement, the
debtor—
(a) makes any false representation, or
(b) fraudulently does, or omits to do, anything,
he commits an offence.
(2) Subsection (1) applies even if the
proposal is not approved.
(3) A person guilty of an offence
under this section is liable to imprisonment or a fine, or both.
262B Prosecution of delinquent debtors
(1) This section applies where a
voluntary arrangement approved by a creditors' meeting summoned under section
257 has taken effect.
(2) If it appears to the nominee or
supervisor that the debtor has been guilty of any offence in connection with
the arrangement for which he is criminally liable, he shall forthwith—
(a) report the matter to the Secretary of State, and
(b) provide the Secretary of State
with such information and give the Secretary of State such access to and
facilities for inspecting and taking copies of documents (being information or
documents in his possession or under his control and relating to the matter in
question) as the Secretary of State requires.
(3) Where a prosecuting authority
institutes criminal proceedings following any report under subsection (2), the
nominee or, as the case may be, supervisor shall give the authority all
assistance in connection with the prosecution which he is reasonably able to
give.
·
For this purpose,
“prosecuting authority” means the Director of Public Prosecutions or the
Secretary of State.
(4) The court may, on the application
of the prosecuting authority, direct a nominee or supervisor to comply with
subsection (3) if he has failed to do so.
For
the purposes of this Part, a voluntary arrangement approved by a creditors'
meeting summoned under section 257 comes to an end prematurely if, when it
ceases to have effect, it has not been fully implemented in respect of all
persons bound by the arrangement by virtue of section 260(2)(b)(i).”
(a) in subsection (2), for “256(3)(a)” there is
substituted “256(3), 256A(4)”, and
(b) in subsection (5), for “in relation to the debtor”
there is substituted “or authorised to act as
supervisor, in relation to the voluntary arrangement”.
(a) in subsection (1), after “(subject to” there is
inserted “sections 252(2)(b) and 254(1) above and”,
(b) in subsection (8), at the beginning there is inserted
“Subject to sections 252(2)(b) and 254(1) above.”
“(a) where an interim order has been
made under section 252 with respect to his proposal, the date of that order,
and
(b) in any other case, the date on which the
voluntary arrangement takes effect.”
“262A(1). |
False representation or fraud for purpose of
obtaining creditors' approval of proposed voluntary arrangement. |
1. On indictment. 2. Summary. |
7 years or a fine, or both. 6 months or the statutory maximum, or both.” |
SCHEDULE 4
Minor and
consequential amendments about disqualification of company directors etc.
Part I
Amendments of the Company
Directors Disqualification Act 1986
1 The [1986 c. 46.] Company Directors
Disqualification Act 1986 is amended in accordance with this Part.
5 (1) In
section 6 (disqualification of unfit directors)—
(a) for
subsection (3) there is substituted—
“(3) In this section and section
7(2), “the court” means—
(a) where
the company in question is being or has been wound up by the court, that court,
(b) where
the company in question is being or has been wound up voluntarily, any court
which has or (as the case may be) had jurisdiction to wind it up,
(c) where
neither of the preceding paragraphs applies but an administration order has at
any time been made, or an administrative receiver has at any time been
appointed, in relation to the company in question, any court which has jurisdiction
to wind it up.
(3A) Sections
117 and 120 of the [1986 c. 45.] Insolvency Act 1986
(jurisdiction) shall apply for the purposes of subsection (3) as if the
references in the definitions of “registered office” to the presentation of the
petition for winding up were references—
(a) in
a case within paragraph (b) of that subsection, to the passing of the
resolution for voluntary winding up,
(b) in
a case within paragraph (c) of that subsection, to the making of the
administration order or (as the case may be) the appointment of the
administrative receiver.
(3B) Nothing in subsection (3)
invalidates any proceedings by reason of their being taken in the wrong court;
and proceedings—
(a) for
or in connection with a disqualification order under this section, or
(b) in
connection with a disqualification undertaking accepted under section 7,
may be
retained in the court in which the proceedings were commenced, although it may
not be the court in which they ought to have been commenced.
(
(a) in
subsection (1)(b), after “being” there is inserted “or has been”,
(b) for
the sidenote there is substituted “Disqualification
order or undertaking; and reporting provisions”.
(a) in
subsection (1), “or shadow director” is omitted,
(b) at
the end of subsection (2) there is inserted “and in this section and that
Schedule “director” includes a shadow director”.
(a) after
“disqualification order or” there is inserted “disqualification undertaking or
in contravention”,
(b) after
“12(2)” there is inserted “or 12A”.
10 (1) Section 15 (personal
liability for company’s debts where person acts while disqualified) is amended
as follows.
(2) In subsection (1)—
(a) in
paragraph (a), after “disqualification order or” there is inserted
“disqualification undertaking or in contravention” and after “
(b) in
paragraph (b), after “disqualification order” there is inserted “or
disqualification undertaking or a disqualification order under Part II of the
[S.I. 1989/2404 (N.I. 18).] Companies (
(3) In subsection (5), after
“disqualification order” there is inserted “or disqualification undertaking or
a disqualification order under Part II of the Companies (
11 (1) In section 16
(application for disqualification order), in subsection (2), for “
12 (1) For
section 17 (application for leave under an order) there is substituted—
“17 Application for leave under
an order or undertaking (1) Where a person is subject to a disqualification
order made by
(2) Where—
(a) a person is subject to a
disqualification order made under section 2 by
(b) a
person is subject to a disqualification order made under section 5,
any
application for leave for the purposes of section 1(1)(a) shall be made to any
court which, when the order was made, had jurisdiction to wind up the company
(or, if there is more than one such company, any of the companies) to which the
offence (or any of the offences) in question related.
(3) Where a person is subject to
a disqualification undertaking accepted at any time under section 7 or 8, any
application for leave for the purposes of section 1A(1)(a)
shall be made to any court to which, if the Secretary of State had applied for
a disqualification order under the section in question at that time, his
application could have been made.
(4) But where a person is
subject to two or more disqualification orders or undertakings (or to one or
more disqualification orders and to one or more disqualification undertakings),
any application for leave for the purposes of section 1(1)(a)
or 1A(1)(a) shall be made to any court to which any such application relating
to the latest order to be made, or undertaking to be accepted, could be made.
(5) On the hearing of an
application for leave for the purposes of section 1(1)(a) or 1A(1)(a), the
Secretary of State shall appear and call the attention of the court to any
matters which seem to him to be relevant, and may himself give evidence or call
witnesses.”
13 (1) Section 18 (register of
disqualification orders) is amended as follows.
(2) In subsection (1)—
(a) in
paragraph (b), after “order” there is inserted “or a disqualification
undertaking”,
(b) after
paragraph (c) there is inserted “or
(d) leave
is granted by
(3) After subsection (2) there
is inserted—
“(2A) The Secretary of State
shall include in the register such particulars as he considers appropriate of
disqualification undertakings accepted by him under section 7 or 8 and of cases
in which leave has been granted as mentioned in subsection (1)(d).”
(4) In subsection (3)—
(a) after
“order” there is inserted “or undertaking”,
(b) at
the end there is inserted—
“and,
in the case of a disqualification undertaking, any other particulars he has
included in the register”.
(5) After subsection (4) there
is inserted—
“(4A) Regulations under this
section may extend the preceding provisions of this section, to such extent and
with such modifications as may be specified in the regulations, to
disqualification orders made under Part II of the [S.I. 1989/2404 (N.I. 18).] Companies (
(6) For the sidenote
there is substituted “Register of disqualification orders and undertakings”.
14 (1) Section 21 (interaction
with Insolvency Act 1986) is amended as follows.
(2) In subsection (2)—
(a) after
“Sections” there is inserted “1A”,
(b) after
“
(c) after
“this Act” there is inserted “and sections 1 and 17 of this Act as they apply
for the purposes of those provisions”.
(3) In subsection (3)—
(a) after
“sections” there is inserted “1A”,
(b) after
“
(c) after
“this Act” there is inserted “and sections 1 and 17 of this Act as they apply
for the purposes of those provisions”.
15 (1) Section 22
(interpretation) is amended as follows.
(2) At the end of subsection (3)
there is inserted “and references to acting as an insolvency practitioner are
to be read in accordance with section 388 of that Act”.
(3) In subsection (4), the words
following “called” are omitted.
Part II
Consequential amendments of
other enactments
Insolvency Act 1986 (c. 45)
16 (1) The
Insolvency Act 1986 is amended as follows.
(2) In section 390(4)(b) (persons not qualified to act as insolvency
practitioners)—
(a) after
“made” there is inserted “or a disqualification undertaking accepted”,
(b) after
“
(3) In section 426(10)
(co-operation between courts)—
(a) in
paragraph (a)—
(i) after “provision” there is inserted “extending to
(ii) after
“sections” there is inserted “1A”,
(iii) for
“12,
(iv) for “and extending to
England and Wales” there is substituted “and sections 1 to 17 of that Act as
they apply for the purposes of those provisions of that Act”,
(b) in
paragraph (b)—
(i) after “sections” there is inserted “1A”,
(ii) for
“12,
(iii) after
“
Law Reform (Miscellaneous
Provisions) (
(a) after
“disqualification order” there is inserted “or disqualification undertaking”,
(b) after
“
Charities Act 1993 (c. 10)
(a) in
subsection (1)(f), after “disqualification order” there is inserted “or
disqualification undertaking” and after the first mention of “
(b) for
subsection (3)(a) there is substituted—
“(a) in the
case of a person subject to a disqualification order or disqualification
undertaking under the [1986 c. 46.] Company
Directors Disqualification Act 1986, leave for the purposes of section 1(1)(a) or 1A(1)(a) of that Act has been granted for him to act
as director of the charity,
(aa)
in the case of a person subject to a disqualification order under Part II of
the Companies (Northern Ireland) Order 1989, leave has been granted by the High
Court in Northern Ireland for him to act as director of the charity”,
(c) in
subsection (4)(a)—
(i) in sub-paragraph (i), after
“disqualification order” there is inserted “or disqualification undertaking”,
(ii) in
sub-paragraph (ii), for “or 12(2)” there is substituted “12(2) or 12A” and
after “order” there is inserted “Northern Irish disqualification orders”.
Pensions Act 1995 (c. 26)
19 (1) The
Pensions Act 1995 is amended as follows.
(2) In section 4(1)(e) (suspension orders), after “
(3) In section 29(1)(f) (persons disqualified for being trustees of trust
schemes)—
(a) after
“disqualification order” there is inserted “or disqualification undertaking”,
(b) after
the first mention of “
Police Act 1996 (c. 16)
(a) after
“disqualification order” there is inserted “or disqualification undertaking”,
(b) after
the first mention of “
Housing Act 1996 (c. 52)
(a) after
“disqualification order” there is inserted “or disqualification undertaking”,
(b) at
the end there is inserted “or to a disqualification order under Part II of the
Companies (
Police Act 1997 (c. 50)
22 (1) The
Police Act 1997 is amended as follows.
(2) In section 91 (Commissioners
for the purposes of Part III), at the end of subsection (7)(b)
there is inserted “or his disqualification undertaking is accepted under
section 7 or 8 of the [1986 c. 46.] Company Directors Disqualification
Act
(3) In Schedule 2 (members of
Service Authorities), in paragraph 3(1)(c)—
(a) after
“disqualification order” there is inserted “or disqualification undertaking”,
(b) after
“1986 or” there is inserted “to a disqualification order under”.
SCHEDULE 5 Repeals
Chapter |
Short title |
Extent of
repeal |
1986 c.
45. |
The Insolvency Act
1986. |
In subsections (2) and (3) of section 5, “approved”. In section 27(3)(a),
“section In section 218, subsection (2) and, in subsection (6)(b), “to the prosecuting authority”. In section 255(1)(d), the
words from “to his creditors” to “to the debtor, and”. |
1986 c.
46. |
The Company Directors Disqualification Act 1986. |
In section 9(1), “or shadow director”. In section 22(4), the words following “called”. |
The Companies Act
1989. |
Section 78. |