30.Sections 26 to 33 and Schedules 1, 2 and 3 are concerned with the powers available and procedures to be followed where the continuity of a licence holder’s air traffic services may be at risk. (In these sections and Schedules, a licence holder is referred to as a licence company.) Continuity of the services may be at risk as a result of a licence holder failing to comply with a condition of its licence or a section 8 duty, or becoming insolvent or otherwise being in a position where a winding up order would normally be made. Section 26 provides licence holders with certain protections as follows:
they may not be wound up voluntarily;
no administration order made under Part II of the Insolvency Act may be made against them; and
no step may be taken by any person to take control over the property of a licence company without first giving 14 days’ notice to the Secretary of State and the CAA.
31.Section 27 provides that if an application is made to a court for a winding up order in respect of a licence holder, the court must not make a winding up order or appoint a provisional liquidator. If, however, the court is satisfied that, but for this provision, it would be appropriate to make a winding up order, it must make an air traffic administration order instead. In those circumstances the Secretary of State and the CAA may nominate the person to manage the company whilst the Order is in effect. Section 28 lists circumstances under which a court may make an air traffic administration order following an application by the Secretary of State or, with the consent of the Secretary of State, by the CAA. In summary these are:
that the company is, or is likely to be, unable to pay its debts;
that, if it were not for section 27, it would be just and equitable for the licence holder to be wound up;
that there has been, or is likely to be, a serious contravention by the licence holder of a section 8 duty;
that a final or provisional order has been made, which has not been challenged by the licence holder, and there has been or is likely to be a serious contravention of the order.
32.Section 29 describes the purpose and effect of an air traffic administration order. The main effect of the order is that whilst it is in force a person appointed by the court will manage the licence holder’s affairs, business and property in a manner which protects the interests of its members and creditors and for the achievement of the following two purposes:
to transfer as a going concern so much of its undertaking as is necessary to ensure the licensed activities are properly carried out (transfers of the undertaking may either be to a single company, or in parts to more than one company); and
to ensure, pending such a transfer, the continuity of the licensed activities.
33.Section 30 and Schedule 1 apply various provisions of the Insolvency Act 1986 relating to administration orders to air traffic administration orders with certain modifications. Schedule 2 deals with the making of transfer schemes following the making of an air traffic administration order.
34.The Government may need to support the provision of services during the period in which an air traffic administration order is in force. Sections 31 and 32 provide a power and set out the procedures for the Secretary of State to make such grants, loans or other financial arrangements as he considers appropriate in respect of a company which is subject to an air traffic administration order.
35.Section 33 and Schedule 3 apply the air traffic administration provisions to Northern Ireland.