PART IICOMPANY VOLUNTARY ARRANGEMENTS
The proposal
Those who may propose an arrangement
14.—(1) The directors of a company (other than one for which an administration order is in force, or which is being wound up) may make a proposal under this Part to the company and to its creditors for a composition in satisfaction of its debts or a scheme of arrangement of its affairs (referred to, in either case, as a “voluntary arrangement”).
(2) A proposal under this Part is one which provides for some person (“the nominee”) to act in relation to the voluntary arrangement either as trustee or otherwise for the purpose of supervising its implementation; and the nominee must be a person who is qualified to act as an insolvency practitioner in relation to the company.
(3) Such a proposal may also be made—
(a)where an administration order is in force in relation to the company, by the administrator, and
(b)where the company is being wound up, by the liquidator.
Procedure where nominee is not the liquidator or administrator
15.—(1) This Article applies where the nominee under Article 14 is not the liquidator or administrator of the company.
(2) The nominee shall, within 28 days (or such longer period as the High Court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the Court stating—
(a)whether, in his opinion, meetings of the company and of its creditors should be summoned to consider the proposal, and
(b)if in his opinion such meetings should be summoned, the date on which, and time and place at which, he proposes the meetings should be held.
(3) For the purposes of enabling the nominee to prepare his report, the person intending to make the proposal shall submit to the nominee—
(a)a document setting out the terms of the proposed voluntary arrangement, and
(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.
(4) The High Court may, 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 Article, direct that the nominee be replaced as such by another person qualified to act as an insolvency practitioner in relation to the company.
Summoning of meetings
16.—(1) Where the nominee under Article 14 is not the liquidator or administrator, and it has been reported to the High Court that such meetings as are mentioned in Article 15(2) should be summoned, the person making the report shall (unless the Court otherwise directs) summon those meetings for the time, date and place proposed in the report.
(2) Where the nominee is the liquidator or administrator, he shall summon meetings of the company and of its creditors to consider the proposal for such a time, date and place as he thinks fit.
(3) The persons to be summoned to a creditors' meeting under this Article are every creditor of the company of whose claim and address the person summoning the meeting is aware.
Consideration and implementation of proposal
Decisions of meetings
17.—(1) The meetings summoned under Article 16 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 in relation to the company; but shall not include any modification by virtue of which the proposal ceases to be a proposal such as is mentioned in Article 14.
(3) A meeting so summoned 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.
(4) A meeting so summoned shall not, except with the concurrence of the preferential creditor concerned, 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.
(5) Subject to paragraphs (3) and (4), each of the meetings shall be conducted in accordance with the rules.
(6) 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 High Court, and, immediately after reporting to theCourt, shall give notice of the result of the meeting to such persons as may be prescribed.
(7) In this Article “preferential debts” has the meaning givenby Article 346; and “preferential creditor” is to be construedaccordingly.
Effect of approval
18.—(1) This Article has effect where each of the meetings summoned under Article 16 approves the proposed voluntary arrangement either with the same modifications or without modifications.
(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 had notice of, and was entitled to vote at, that meeting (whether or not he was present or represented at the meeting) as if he were a party to the voluntary arrangement.
(3) Subject to paragraph (4), if the company is being wound up or an administration order is in force, the High Court may do one or both of the following, namely—
(a)by order stay all proceedings in the winding up or discharge the administration order;
(b)give such directions with respect to the conduct of the winding up or the administration as it thinks appropriate for facilitating the implementation of the approved voluntary arrangement.
(4) The High Court shall not make an order under paragraph (3)(a)—
(a)at any time before the expiration of 28 days from the day on which each of the reports required by Article 17(6) has been made to the Court, or
(b)at any time when an application under Article 19 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
19.—(1) Subject to this Article, an application to the High Court may be made, by any of the persons specified in paragraph (2), on one or both of the following grounds, namely—
(a)that a voluntary arrangement approved at the meetings summoned under Article 16 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 the meetings.
(2) The persons who may apply under this Article are—
(a)a person entitled, in accordance with the rules, to vote at either of the meetings;
(b)the nominee or any person who has replaced him under Article 15(4) or 17(2); and
(c)if the company is being wound up or an administration order is in force, the liquidator or administrator.
(3) An application under this Article shall not be made after the expiration of 28 days from the day on which each of the reports required by Article 17(6) has been made to the High Court.
(4) Where on such an application the High Court is satisfied as to either of the grounds mentioned in paragraph (1), it may do one or both of the following, namely—
(a)revoke or suspend the approvals given by the meetings or, in a case falling within paragraph (1)(b), any approval given by the meeting in question;
(b)give a direction to any person for the summoning of further meetings to consider any revised proposal the person who made the original proposal may make or, in a case falling within paragraph (1)(b), 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 paragraph (4)(b) for the summoning of meetings to consider a revised proposal the High Court is satisfied that the person who made the original proposal does not intend to submit a revised proposal, the Court shall revoke the direction and revoke or suspend any approval given at the previous meetings.
(6) In a case where the High Court, on an application under this Article with respect to any meeting—
(a)gives a direction under paragraph (4)(b), or
(b)revokes or suspends an approval under paragraph (4)(a) or (5),
the Court may give such supplemental directions as it thinks fit and, in particular, directions with respect to things done since the meeting under any voluntary arrangement approved by the meeting.
(7) Except in pursuance of the preceding provisions of this Article, an approval given at a meeting summoned under Article 16 is not invalidated by any irregularity at or in relation to the meeting.
Implementation of proposal
20.—(1) This Article applies where a voluntary arrangement approved by the meetings summoned under Article 16 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 on the nominee, or
(b)by virtue of Article 15(4) or 17(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 High Court; and on the application 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.
(4) The supervisor—
(a)may apply to the High 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 High Court for the winding up of the company or for an administration order to be made in relation to it.
(5) The High 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 in relation to the company, either in substitution for the existing supervisor or to fill a vacancy.
(6) The power conferred by paragraph (5) 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.