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Insolvency Act 1986

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5 Effect of approval.E+W+S

[F1(1)This section applies where a decision approving a voluntary arrangement has effect under section 4A.]

(2)The F2. . . voluntary arrangement—

(a)takes effect as if made by the company at the [F3creditors’ meeting] [F3time the creditors decided to approve the voluntary arrangement] , and

[F4(b)binds every person who in accordance with the rules—

(i)was entitled to vote [F5at that meeting (whether or not he was present or represented at it)] [F5in the qualifying decision procedure by which the creditors' decision to approve the voluntary arrangement was made] , 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.]

(3)Subject as follows, if the company is being wound up or [F6is in administration], the court may do one or both of the following, namely—

(a)by order stay or sist all proceedings in the winding up or [F6provide for the appointment of the administrator to cease to have effect];

(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 F2. . . voluntary arrangement.

(4)The court shall not make an order under subsection (3)(a)—

(a)at any time before the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) [F7and (6A)] has been made to the court, or

(b)at any time when an application under the next section 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.

[F8(5)Where the company is in energy administration, the court shall not make an order or give a direction under subsection (3) unless—

(a)the court has given the Secretary of State or the Gas and Electricity Markets Authority a reasonable opportunity of making representations to it about the proposed order or direction; and

(b)the order or direction is consistent with the objective of the energy administration.

(6)In subsection (5) “in energy administration” and “objective of the energy administration” are to be construed in accordance with Schedule B1 to this Act, as applied by Part 1 of Schedule 20 to the Energy Act 2004.]

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Amendments (Textual)

F1S. 5(1) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 6(a); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F2Words in s. 5(2)(3) repealed (1.1.2003) by 2000 c. 39, ss. 2, 15, Sch. 2 Pt. I para. 6(b), Sch. 5; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F4S. 5(2)(b)(2A) substituted (1.1.2003) for s. 5(2)(b) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 6(c); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F6Words in s. 5(3) substituted (15.9.2003) by 2002 c. 40, ss. 248(3), 279, Sch. 17 para. 11(a)(b) (with s. 249(1)-(3)(6)); S.I. 2003/2093, art. 2(1), Sch. 1 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))

Modifications etc. (not altering text)

C1S. 5 restricted (S.) (1.11.2001) by 2001 asp 10, s. 63, Sch. 7 para. 10(5); S.S.I. 2001/336, art. 2(3), Sch. Pt. II (subject to transitional provisions and savings in art. 3)

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