The Insolvent Partnerships (Amendment) Order 2005

Citation, commencement and interpretation

1.—(1) This Order may be cited as the Insolvent Partnerships (Amendment) Order 2005 and shall come into force on 1st July 2005 (“the commencement date”).

(2) In this Order—

“the Act” means the Insolvency Act 1986; and

“the 1994 Order” means the Insolvent Partnerships Order 1994(1).

Transitional provisions

2.  The amendments to the 1994 Order set out in articles 3, 7 and 12 of this Order do not apply where a petition for an administration order has been presented in relation to an insolvent partnership before the commencement date.

Amendments to Part III of the Insolvent Partnerships Order 1994

3.  For Part III of the 1994 Order (administration orders) substitute—

“PART III ADMINISTRATION

Administration in relation to insolvent partnership

6.— (1) The provisions of Part II of, and Schedule B1 to, the Act shall apply in relation to an insolvent partnership, certain of those provisions being modified in such manner that, after modification, they are as set out in Schedule 2 to this Order.

(2) In its application to insolvent partnerships, Part II of, and Schedule B1 to, the Act (as modified as set out in Schedule 2 to this Order) shall be read subject to paragraph (3).

(3) For every reference to—

(a) “administrative receiver” there shall be substituted “agricultural receiver”; and

(b) “floating charge” there shall be substituted “agricultural floating charge”.

(4) For the purposes of the provisions of the Act applied by paragraph (1), the provisions of the Act specified in paragraph (5) below, insofar as they relate to the appointment of an administrator, shall also apply in relation to insolvent partnerships.

(5) The provisions referred to in paragraph (4) are—

(a) Part VI,

(b) Part VII (with the exception of section 250),

(c) Part XII,

(d) Part XIII,

(e) sections 411, 413, 414 and 419 in Part XV, and

(f) Parts XVI to XIX.

(6) For the purposes of this Article and the provisions of the Act applied by paragraph (1), “agricultural floating charge” shall be construed as a reference to a floating charge created under section 5 of the Agricultural Credits Act 1928.”.

Amendment to Article 8 of the Insolvent Partnerships Order 1994

4.  In Article 8(5)(a) after “Part IV” insert “(other than section 176A)”.

Amendment to Article 10 of the Insolvent Partnerships Order 1994

5.  In Article l0—

(a) in paragraph (3)(a) after “Part IV” insert “(other than section 176A)”; and

(b) for paragraph (6) substitute—

“(6) Certain of the provisions referred to in paragraphs (2) and (4) are modified in their application in relation to the corporate or individual members of insolvent partnerships in such manner that, after modification, they are as set out in Part II of Schedule 4 to this Order.”.

Amendments to Schedule 1 to the Insolvent Partnerships Order 1994

6.—(1) Schedule 1 to the 1994 Order (modified provisions of Part 1 of, and Schedule Al to, the Act (company voluntary arrangements) as applied by Article 4) is amended as follows.

(2) In modified section 1 (those who may propose an arrangement)—

(a) in subsection (1) for “for which an administration order is in force” substitute “which is in administration”;

(b) in subsection (3)(a) for “an administration order is in force in relation to the partnership” substitute, “the partnership is in administration”;

(c) omit modified subsection (4).

(3) In modified section 5 (effect of approval)—

(a) in subsection (3) for “an administration order” substitute “is in administration”;

(b) in subsection (3)(a)(ii) for “discharge the administration order” substitute “provide for the appointment of the administrator to cease to have effect”.

(4) In modified section 6 (challenge of decisions) in subsection (2)(d) for “an administration order or” substitute “is in administration or an”.

(5) In modified paragraph 3 of Schedule Al—

(a) in sub-paragraph (3)(a) for “£2.8” substitute “£5.6”; and

(b) in sub-paragraph (3)(b) for “£1.4” substitute “£2.8”.

(6) In modified paragraph 4(1)(a) of Schedule Al for “an administration order is in force in relation to the insolvent partnership” substitute “the partnership is in administration”.

(7) For modified paragraph 12(1)(d) of Schedule Al substitute—

“(d) no administration application may be made in respect of the partnership,

(da) no administrator of the partnership may be appointed under paragraph 14 or 22 of Schedule B1,”.

(8) For modified paragraph 40(7) of Schedule Al substitute—

“(7) Sub-paragraph (8) applies where—

(a) the appointment of an administrator has effect in relation to the insolvent partnership and the appointment took effect before the moratorium came into force, or

(b) the insolvent partnership is being wound up as an unregistered company or an order by virtue of article 11 of the Insolvent Partnerships Order 1994 has been made, in pursuance of a petition presented before the moratorium came into force.

(8) No application for an order under this paragraph may be made by a creditor or member of the insolvent partnership; but such an application may be made instead by the administrator (or as the case may be) the liquidator.”.

Amendment to Schedule 2 to the Insolvent Partnerships Order 1994

7.  For Schedule 2 to the 1994 Order (modified provisions of Part II of the Act) substitute the provisions set out in Schedule 1 to this Order.

Amendment to Schedule 3 to the Insolvent Partnerships Order 1994

8.  In paragraph 10 of Part II of Schedule 3 to the 1994 Order (modifications to Schedule 4) insert after modified paragraph 3 of modified Schedule 4 (powers of liquidator in a winding up) the following—

“3A.   Power to bring legal proceedings under section 213, 214, 238, 239 or 423”.

Amendments to Schedule 4 of the Insolvent Partnerships Order 1994

9.—(1) Schedule 4 to the 1994 Order (modified provisions of the Act applying for purposes of Article 8) is amended as follows.

(2) In paragraph 1(2) of Part I after “283” insert “283A” and after “305” insert “313A”.

(3) In paragraph 15 of Part II (section 140: appointment by the court following administration or voluntary arrangement), in modified section 140(2) for “discharge of an administration order in respect of the partnership” substitute “appointment of an administrator in respect of the partnership ceasing to have effect” and for “who has ceased on the discharge of the administration order to be the administrator of the partnership” substitute “whose appointment as administrator has ceased to have effect”.

(4) After paragraph 28 of Part II (section 283: definition of individual member’s estate) insert new paragraph 28A as follows:—

“28A.   Section 283A: Individual member’s home ceasing to form part of estate

• Section 283A is modified so as to read as follows:—

  “283A.— (1) This section applies where property comprised in the estate of an individual member consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of—

  (a) the individual member;

  (b) the individual member’s spouse, or

  (c) a former spouse of the individual member.

  (2) At the end of the period of three years beginning with the date of the bankruptcy the interest mentioned in subsection (1) shall—

  (a) cease to be comprised in the individual member’s estate, and

  (b) vest in the individual member (without conveyance, assignment or transfer).

  (3) Subsection (2) shall not apply if during the period mentioned in that subsection—

  (a) the trustee realises the interest mentioned in subsection (1),

  (b) the trustee applies for an order for sale in respect of the dwelling-house,

  (c) the trustee applies for an order for possession of the dwelling-house,

  (d) the trustee applies for an order under section 313 in Chapter IV in respect of that interest, or

  (e) the trustee and the individual member agree that the individual member shall incur a specified liability to his estate (with or without the addition of interest from the date of the agreement) in consideration of which the interest mentioned in subsection (1) shall cease to form part of the estate.

  (4) Where an application of a kind described in subsection (3)(b) to (d) is made during the period mentioned in subsection (2) and is dismissed, unless the court orders otherwise the interest to which the application relates shall on the dismissal of the application—

  (a) cease to be comprised in the individual member’s estate, and

  (b) vest in the individual member (without conveyance, assignment or transfer).

  (5) If the individual member does not inform the trustee or the official receiver of his interest in a property before the end of the period of three months beginning with the date of the bankruptcy, the period of three years mentioned in subsection (2)—

  (a) shall not begin with the date of the bankruptcy, but

  (b) shall begin with the date on which the trustee or official receiver becomes aware of the individual member’s interest.

  (6) The court may substitute for the period of three years mentioned in subsection (2) a longer period—

  (a) in prescribed circumstances, and

  (b) in such other circumstances as the court thinks appropriate.

  (7) The rules may make provision for this section to have effect with the substitution of a shorter period for the period of three years mentioned in subsection (2) in specified circumstances (which may be described by reference to action to be taken by a trustee in bankruptcy).

  (8) The rules may also, in particular, make provision—

  (a) requiring or enabling the trustee of an individual member’s estate to give notice that this section applies or does not apply;

  (b) about the effect of a notice under paragraph (a);

  (c) requiring the trustee of an individual member’s estate to make an application to the Chief Land Registrar.

  (9) Rules under subsection (8)(b) may, in particular—

  (a) disapply this section;

  (b) enable a court to disapply this section;

  (c) make provision in consequence of a disapplication of this section;

  (d) enable a court to make provision in consequence of a disapplication of this section;

  (e) make provision (which may include provision conferring jurisdiction on a court or tribunal) about compensation.”.”.

(5) After paragraph 29 of Part II (section 284: individual member: restrictions on dispositions of property) insert new paragraph 29A as follows—

“29A.   Section 313A: Low value home: application for sale, possession or charge

• Section 313A is modified so as to read as follows:—

  “313A.— (1) This section applies where—

  (a) property comprised in the individual member’s estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of—

  (i) the individual member,

  (ii) the individual member’s spouse, or

  (iii) a former spouse of the individual member, and

  (b) the trustee applies for an order for the sale of the property, for an order for possession of the property or for an order under section 313 in respect of the property.

  (2) The court shall dismiss the application if the value of the interest is below the amount prescribed for the purposes of this subsection.

  (3) In determining the value of an interest for the purposes of this section the court shall disregard any matter which it is required to disregard by the order which prescribes the amount for the purposes of subsection (2).”.”.

(6) In paragraph 30 (modification of Schedule 4) insert after modified paragraph 3 of modified Schedule 4 the following—

“3A.   Power to bring legal proceedings under section 213, 214, 238, 239 or 423.”.

Amendment to Schedule 7 to the Insolvent Partnerships Order 1994

10.—(1) Schedule 7 to the 1994 Order (modified provisions for the purposes of Article 11) is amended as follows.

(2) In paragraph 1(2) omit “275,”.

(3) Omit paragraph 6 (section 275: summary administration).

(4) After paragraph 7 (section 283: definition of member’s estate) insert new paragraph 7A as follows—

“7A.   Section 283A: Bankrupt’s home ceasing to form part of estate

• Section 283A is modified so as to read as follows:—

  “283A.— (1) This section applies where property comprised in the estate of an individual member consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of—

  (a) the individual member;

  (b) the individual member’s spouse, or

  (c) a former spouse of the individual member.

  (2) At the end of the period of three years beginning with the date of the bankruptcy the interest mentioned in subsection (1) shall—

  (a) cease to be comprised in the individual member’s estate, and

  (b) vest in the individual member (without conveyance, assignment or transfer).

  (3) Subsection (2) shall not apply if during the period mentioned in that subsection—

  (a) the trustee realises the interest mentioned in subsection (1),

  (b) the trustee applies for an order for sale in respect of the dwelling-house,

  (c) the trustee applies for an order for possession of the dwelling-house,

  (d) the trustee applies for an order under section 313 in Chapter IV in respect of that interest, or

  (e) the trustee and the individual member agree that the individual member shall incur a specified liability to his estate (with or without the addition of interest from the date of the agreement) in consideration of which the interest mentioned in subsection (1) shall cease to form part of the estate.

  (4) Where an application of a kind described in subsection (3)(b) to (d) is made during the period mentioned in subsection (2) and is dismissed, unless the court orders otherwise the interest to which the application relates shall on the dismissal of the application—

  (a) cease to be comprised in the individual member’s estate, and

  (b) vest in the individual member (without conveyance, assignment or transfer).

  (5) If the individual member does not inform the trustee or the official receiver of his interest in a property before the end of the period of three months beginning with the date of the bankruptcy, the period of three years mentioned in subsection (2)—

  (a) shall not begin with the date of the bankruptcy, but

  (b) shall begin with the date on which the trustee or official receiver becomes aware of the individual member’s interest.

  (6) The court may substitute for the period of three years mentioned in subsection (2) a longer period—

  (a) in prescribed circumstances, and

  (b) in such other circumstances as the court thinks appropriate.

  (7) The rules may make provision for this section to have effect with the substitution of a shorter period for the period of three years mentioned in subsection (2) in specified circumstances (which may be described by reference to action to be taken by a trustee in bankruptcy).

  (8) The rules may also, in particular, make provision—

  (a) requiring or enabling the trustee of an individual member’s estate to give notice that this section applies or does not apply;

  (b) about the effect of a notice under paragraph (a);

  (c) requiring the trustee of an individual member’s estate to make an application to the Chief Land Registrar.

  (9) Rules under subsection (8)(b) may, in particular—

  (a) disapply this section;

  (b) enable a court to disapply this section;

  (c) make provision in consequence of a disapplication of this section;

  (d) enable a court to make provision in consequence of a disapplication of this section;

  (e) make provision (which may include provision conferring jurisdiction on a court or tribunal) about compensation.”.”.

(5) After paragraph 20 insert new paragraph 20A as follows—

“20A.   Section 313A: Low value home: application for sale, possession or charge

• Section 313A is modified so as to read as follows:—

  “313A.— (1) This section applies where—

  (a) property comprised in the individual member’s estate consists of an interest in a dwelling-house which at the date of the bankruptcy was the sole or principal residence of—

  (i) the individual member,

  (ii) the individual member’s spouse, or

  (iii) a former spouse of the individual member, and

  (b) the trustee applies for an order for the sale of the property, for an order for possession of the property or for an order under section 313 in respect of the property.

  (2) The court shall dismiss the application if the value of the interest is below the amount prescribed for the purposes of this subsection.

  (3) In determining the value of an interest for the purposes of this section the court shall disregard any matter which it is required to disregard by the order which prescribes the amount for the purposes of subsection (2).”.”.

Amendments to Schedule 8 to the Insolvent Partnerships Order 1994

11.—(1) Schedule 8 to the 1994 Order (modified provisions of Company Directors Disqualification Act 1986 for the purposes of Article 16) is amended as follows.

(2) In modified section 6 (duty of court to disqualify unfit officers of insolvent partnerships)—

(a) in subsection (2)(a)(ii) for “an administration order is made in relation to the partnership” substitute “the partnership enters administration”;

(b) in subsection (2)(b)(ii) for “an administration order is made in relation to the company” substitute “the company enters administration”;

(c) in subsection (4)(b) for “an administration order has at any time been made” substitute “an administrator has at any time been appointed”.

(3) In modified section 7(3)(b) (disqualification order or undertaking; and reporting provisions) for “in relation to which an administration order is in force” substitute “which is in administration”.

(4) In modified Schedule 1 (matters for determining unfitness of officers of partnerships) in paragraph 12(a) for “section 22” substitute “paragraph 48 of Schedule B1”.

Amendment to Schedule 9 to the Insolvent Partnerships Order 1994

12.  Schedule 9 to the 1994 Order (forms) is amended as follows—

(a) in the entry for Form 1 for “Petition for administration order” substitute “Administration application”;

(b) after the entry for Form 1 insert the following entries—

• “IA Notice of intention to appoint an administrator by the members of the partnership

• IB Notice of an appointment of an administrator by the members of the partnership (where a notice of intention to appoint has not been issued)”;

(c) for Forms 1, 4 and 16 substitute the Forms so numbered in Schedule 2 to this Order and after Form 1 insert Forms IA and IB as set out in Schedule 2 to this Order.

Amendment to Schedule 10 to the Insolvent Partnerships Order 1994

13.  Schedule 10 to the 1994 Order is amended as follows—

(a) for “The Insolvency Regulations 1986” substitute “The Insolvency Regulations 1994”(2);

(b) omit “The Insolvency Fees Order 1986”;

(c) for “The Companies (Disqualification Orders) Regulations 1986” substitute “The Companies (Disqualification Orders) Regulations 2001(3);

(d) for “The Insolvent Companies (Reports on Conduct of Directors) No. 2 Rules 1986” substitute “The Insolvent Companies (Reports on Conduct of Directors) Rules 1996(4);

(e) for “The Insolvency Practitioners Regulations 1990” substitute “The Insolvency Practitioners Regulations 2005(5);

(f) at the end insert—

• “The Insolvency Practitioners and Insolvency Services Accounts (Fees) Order 2003(6);

• The Insolvency Proceedings (Fees) Order 2004(7)”.

Falconer of Thoroton C.

1st June 2005

I concur, on behalf of the Secretary of State

Gerry Sutcliffe

Parliamentary Under-Secretary for Employment Relations and Consumer Affairs

Department of Trade and Industry

7th June 2005