Search Legislation

Insolvency Act 1986

 Help about what version

What Version

 Help about advanced features

Advanced Features

Changes over time for: Insolvency Act 1986

 Help about opening options

Alternative versions:

Changes to legislation:

Insolvency Act 1986 is up to date with all changes known to be in force on or before 06 October 2022. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.

Legislation Crest

U.K.

Insolvency Act 1986

1986 CHAPTER 45

An Act to consolidate the enactments relating to company insolvency and winding up (including the winding up of companies that are not insolvent, and of unregistered companies); enactments relating to the insolvency and bankruptcy of individuals; and other enactments bearing on those two subject matters, including the functions and qualification of insolvency practitioners, the public administration of insolvency, the penalisation and redress of malpractice and wrongdoing, and the avoidance of certain transactions at an undervalue

[25th July 1986]

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:—

Modifications etc. (not altering text)

C1Act amended by Social Security Pensions Act 1975 (c. 60), s. 59D(3) (as inserted by Social Security Act 1990 (c. 27), s. 12(1), Sch. 3)

Act amended (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 158(1), 174(1), 190(6); S.I. 1991/878, art. 2, Sch. (with art. 3(4))

Act amended (29.6.1992) by Social Security Pensions Act 1975 (c. 60), s. 58B(5) (as inserted (29.6.1992) by Social Security Act 1990 (c. 27), s. 14, Sch. 4 Pt. I para. 2; S.I. 1992/1532, art. 2)

Act amended (1.4.1994) by 1993 c. 43, ss. 59(3), 150(1)(c), Sch. 6 Pt. III para. 20(1)-(3); S.I. 1994/571, art. 5 (with transitional provision in art. 7)

Act (except ss. 8-10, 24-26) amended (1.2.2001) by 2000 c. 38, s. 30, Sch. 1 Pt. II para. 13(1)(3) (with ss. 105(2)(5), 106); S.I. 2001/57, art. 3(1), Sch. 2 Pt. I (subject to transitional provision and saving in Sch. 2 Pt. II)

Act amended (1.2.2001) by 2000 c. 38, s. 30, Sch. 1 Pt. II para. 13(2)(3) (with ss. 105(2)(5), 106); S.I. 2001/57, art. 3(1), Sch. 2 Pt. I (subject to transitional provision and saving in Sch. 2 Pt. II)

Act amended (30.12.2002) by 2002 c. 29, s. 311(4); S.I. 2002/3015, art. 2(1), Sch.

C2Act restricted (E.W.S.) by Drug Trafficking Offences Act 1986 (c. 32), s. 15(3)(7)

Act restricted (25.4.1991) by Companies Act 1989 (c. 40), s. 182(4), Sch. 22 para. 4(2); S.I. 1991/878, art. 2, Sch.

Act restricted (3.2.1995) by 1994 c. 37, ss. 32(4), 69(2), Sch. 2 para. 5 (with s. 66(2))

Act restricted (31.3.1996) by 1995 c. 20, s. 110(1), Sch. 4 para. 2(4); S.I. 1996/517, art. 3(2) (subject to arts. 4-6, Sch. 2)

Act restricted (1.4.1996) by 1995 c. 43, ss. 44, 50(2), Sch. 2 para. 2(4)

Act restricted (6.4.1996 for certain purposes and 6.4.1997 otherwise) by 1995 c. 26, s. 75(8)(a) (with s. 121(5)); S.I. 1996/778, art. 2(5)(a), Sch. Pt. V; S.I. 1997/664, art. 2(3), Sch. Pt. II (with transitional adaptations, modifications and savings in arts. 3-14)

Act restricted (7.10.1996) by 1992 c. 5, ss. 71(10A), 78(3A) (as inserted by 1995 c. 18, s. 32; S.I. 1996/2208, art. 2)

Act restricted (S.) (1.11.2001) by 2001 asp 10, s. 63, Sch. 7 paras. 9(4), 10(6); S.S.I. 2001/336, art. 2(3), Sch. Pt. II (subject to transitional provisions and savings in art. 3)

Act restricted (24.3.2003) by 2002 c. 29, ss. 417(4), 458(1)(3); S.I. 2003/333, art. 2, Sch. (subject to transitional provisions and savings in arts. 3-13 (as amended by S.I. 2003/531, arts. 3, 4))

C3Act excluded (E.W.S.) by Drug Trafficking Offences Act 1986 (c. 32), ss. 15(5)( a )(7), 17(3)

Act excluded by Criminal Justice (Scotland) Act 1987 (c. 41), ss. 30(6), 34(3)(4), 35(3), 36(3), 47(4)(a)

Act excluded (E.W.) by Dartford-Thurrock Crossing Act 1988 (c. 20), ss. 15(4), 19

Act excluded by Criminal Justice Act 1988 (c. 33), ss. 84(3), 86(3), 123, Sch. 8 para. 16

Act excluded by Social Security Act 1989 (c. 24), s. 22, Sch. 4 Pt. II para. 8(1)

Act excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 159(2), 180(2); S.I. 1991/878, art. 2, Sch.

Act excluded (13.2.1992) by Severn Bridges Act 1992 (c. 3), s. 20(4)

Act excluded (1.7.1992) by Social Security Administration Act 1992 (c. 5), ss. 89(1), 93(1), 192(4) (with s. 89(1))

Act excluded (31.10.1994) by 1994 c. 21, s. 29(2) (with s. 40(7)); S.I. 1994/2552, art. 2, Sch. 1

Act excluded (3.2.1995) by 1994 c. 37, ss. 32(2), 34(2), 69(2), Sch. 2 para. 5 (with s. 66(2))

Act excluded (31.3.1996) by 1995 c. 20, s. 110(1), Sch. 4 paras. 2(3), 3(3), 4(3); S.I. 1996/517, art. 3(2) (subject to arts. 4-6, Sch. 2)

Act excluded (1.4.1996) by 1995 c. 43, ss. 44, 50(2), Sch. 2 paras. 2(3), 3(3), 4(3)

Act excluded (1.10.1996) by 1996 c. 52, s. 7, Sch. 1 Pt. II para. 15(2); S.I. 1996/2402, art. 3 (subject to transitional provisions and savings in Sch.)

Act excluded (E.W.S.) (11.12.1999) by S.I. 1999/2979, reg. 14(2)

Act excluded (E.W.) (1.9.2001) by 2001 c. 17, s. 38, Sch. 6 paras. 9(3), 11(3) (with s. 78); S.I. 2001/2161, art. 2

Act excluded (S.) (1.11.2001) by 2001 asp 10, s. 63, Sch. 7 para. 12(3); S.S.I. 2001/336, art. 2(3), Sch. Pt. II (subject to transitional provisions and savings in art. 3)

Act excluded (S.) (17.12.2001) by 2001 asp 13, s. 20(b), Sch. 6 paras. 9(3), 10(5); S.S.I. 2001/456, art. 2

Act excluded (24.3.2003) by 2002 c. 29, ss. 418(4), 426(7), 430(7), 458(1)(3); S.I. 2003/333, art. 2, Sch. (subject to transitional provisions and savings in arts. 3-13 (as amended by S.I. 2003/531, arts. 3, 4))

C4Act modified by Financial Services Act 1986 (c. 60), s. 72(4)

Act modified by S.I. 1986/2142, arts. 1(2), 3(a), 15

Act modified by S.I. 1989/638, regs. 8(1), 21

Act modified (7.2.1994) by 1993 c. 48, ss. 144(7)(a), 147(3) (with s. 6(8)); S.I. 1994/86, art. 2

Act modified (31.10.1994) by 1994 c. 21, s. 36(1) (with s. 40(7)); S.I. 1994/2553, art. 2

Act modified (S.) (1.11.2001) by 2001 asp 10, s. 63, Sch. 7 para. 11; S.S.I. 2001/336, art. 2(3), Sch. Pt. II (subject to transitional provisions and savings in art. 3)

Act modified (E.W.S.) (5.10.2004) by Energy Act 2004 (c. 20), ss. 159, 198, Sch. 20 paras. 41, 42; S.I. 2004/2575, art. 2(1), Sch. 1

Act modified (E.W.) (1.10.2005) by The Energy Administration Rules 2005 (S.I. 2005/2483), rules 3, 184

Act modified (S.) (6.4.2006) by The Energy Administration (Scotland) Rules 2006 (S.I. 2006/772), rules 3, 68

C5Act applied (with modifications) by S.I. 1986/2142, arts. 1(2), 8(1)(b)(2), 13(3)(4)(6), 15, Sch. 2

Act applied (with modifications) (6.1.1997) by S.I. 1996/2827, reg. 25(1)-(4)

Act applied (with modifications) (1.12.2001) by S.I. 2001/1228, regs. 1(2), 31(1) (with reg. 1(3)); S.I. 2001/3538, art. 2(1)

Act applied (1.12.2001) by 2000 c. 8, s. 367(7); S.I. 2001/3538, art. 2(1)

C6Act extended by Banking Act 1987 (c. 22), s. 92(2)

Act extended (E.W.) by Water Act 1989 (c. 15), s. 23, Sch. 6 Pt. II para. 11(1)(2)(3) (with ss. 58(7), 101(1), 141(6), 160(1)(2)(4), 163, 189(4)?(10), 190, 193(1), Sch. 26 paras. 3(1)(2), 17, 40(4), 57(6), 58)

Act extended (E.W.) (1.12.1991) by Water Industry Act 1991 (c. 56), ss. 23(3), 223(2), Sch. 3 Pt. II paras.11(1)-(3), 12(2) ( with ss. 82(3), 186(1), 222(1), Sch. 14 para. 6).

Act (except s. 413, Sch. 7) extended (E.W.) (1.1.1992) by S.I. 1991/2684, arts. 2(1), 4, Sch.1.

Act extended (1.10.1996) by 1996 c. 52. s. 7, Sch. 1 Pt. II para. 14(1); S.I. 1996/2402, art. 3 (subject to transitional provisions and savings in Sch.)

Act (except ss. 8-10, 24-26) extended (15.7.2003) by 1999 c. 29, s. 220(3), Sch. 14 Pt. III para. 20; S.I. 2003/1920, art. 2

C7Act: power to modify conferred (2.4.2001) by 2000 c. 39, s. 7(2); S.I. 2001/776, art. 2(1)(a) (subject to transitional provisions in art. 3)

Act: power to apply (with modifications) conferred (E.W.S.) (15.9.2003) by 2002 c. 40, ss. 254(1), 279 (with s. 249(6)); S.I. 2003/2093, art. 2(1), Sch. 1 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))

Act: power to amend conferred (E.W.) (1.4.2004) by 2002 c. 40, ss. 264(2), 279 (with s. 249(6)); S.I. 2003/2093, art. 2(2), Sch. 2 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))

C9Act applied (with modifications) (6.4.2008) by Serious Crime Act 2007 (c. 27), ss. 27(2)-(4), 94; S.I. 2008/755, art. 15(1)(f)

C10Act applied in part (with modifications) (8.10.2008 at 12.15 p.m.) by The Kaupthing Singer & Friedlander Limited Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2674), Pt. 5 (arts. 19-27)

C11Act applied in part (with modifications) (7.10.2008 at 9.30 a.m.) by The Heritable Bank plc Transfer of Certain Rights and Liabilities Order 2008 (S.I. 2008/2644), Pt. 4 (arts. 18-25)

C12Act excluded (26.1.2009) by 1998 c. 17 s. 38A(6) (as inserted by Energy Act 2008 (c. 32), ss. 74(1), 110; S.I. 2009/45, art. 2(b)(i))

C15Act: power to amend conferred (17.2.2009 for certain purposes, otherwise 21.02.2009) by Banking Act 2009 (c. 1), s. 158(2)(b) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch.

C16Act: power to amend conferred (17.2.2009 for certain purposes, otherwise 21.02.2009) by Banking Act 2009 (c. 1), s. 159(2)(b) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch.

C20Act: power to modify conferred (E.W.) (1.10.2010 for specified purposes) by Flood and Water Management Act 2010 (c. 29), ss. 34, 49(3), Sch. 5 para. 3 (with s. 49(1)(6)); S.I. 2010/2169, art. 4, Sch.

C24Act: power to modify conferred (1.10.2011) by Postal Services Act 2011 (c. 5), ss. 73, 93(2)(3), Sch. 10 para. 46; S.I. 2011/2329, art. 3 (with arts. 4, 5)

C26Act excluded (S.) (1.4.2012) by Housing (Scotland) Act 2010 (asp 17), ss. 106(7)(b), 166(2); S.S.I. 2012/39, art. 2, sch. 1 (with sch. 2) (as amended (1.4.2012) by S.S.I. 2012/91, art. 4)

C31Act: power to apply (with or without modifications) conferred by 2007 c. 27, s. 27A(7) (as inserted (1.3.2016) by Serious Crime Act 2015 (c. 9), s. 88(1), Sch. 1 para. 20; S.I. 2016/148, reg. 3(f))

C32Act applied by 2007 c. 27, s. 27A(2) (as inserted (1.3.2016) by Serious Crime Act 2015 (c. 9), s. 88(1), Sch. 1 para. 20; S.I. 2016/148, reg. 3(f))

C33Act modified by The Insolvent Partnerships Order 1994 (S.I. 1994/2421), Sch. 4 (as amended (6.4.2017) by The Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) (Savings) Regulations 2017 (S.I. 2017/540), Sch. 2 para. 8 (with reg. 4))

C34Act modified by The Insolvent Partnerships Order 1994 (S.I. 1994/2421), Sch. 7 (as amended (6.4.2017) by The Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) (Savings) Regulations 2017 (S.I. 2017/540), Sch. 2 para. 9 (with reg. 4))

C36Act modified by 1986 c. 46, s. 22H(4)(g) (as inserted (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212), reg. 1(2), Sch. 4 para. 3 (with reg. 189))

C37Act applied (with modifications) (8.12.2017) by The Risk Transformation Regulations 2017 (S.I. 2017/1212), regs. 1(2), 166(2), 167(2), Sch. 2, Sch. 3 (with regs. 168, 189)

C38Act modified by S.I. 2012/3013, Sch. 2 para. 34 (as inserted (4.7.2018) by The Insolvency of Registered Providers of Social Housing Regulations 2018 (S.I. 2018/728), regs. 1, 3(6), Sch. 2)

C41Act specified provisions applied (with modifications) (13.7.2018 for E.W.) by Financial Services (Banking Reform) Act 2013 (c. 33), s. 148(5), Sch. 6 para. 5 (as amended by S.I. 2017/400, regs. 1(2), 6(a)(b) and S.I. 2018/208, regs. 1(3), 6(b)); S.I. 2018/848, art. 2(b)

C42Act power to modify or exclude conferred (31.1.2019) by Technical and Further Education Act 2017 (c. 19), ss. 6(2)(a)(3)(4), 47(2); S.I. 2018/1161, reg. 3(a)

C45Act applied in part (with modifications) (31.1.2019) by Technical and Further Education Act 2017 (c. 19), ss. 6(2)(b)(3), 9-12, 47(2); S.I. 2018/1161, reg. 3(a)

Commencement Information

I1Act not in force at Royal Assent, see s. 443

The First Group of PartsE+W+S Company Insolvency; Companies Winding Up

[F1Part A1U.K.Moratorium

Textual Amendments

Modifications etc. (not altering text)

C51Pt. A1 excluded by S.I. 2012/3013, Sch. 1 para. 1(2A) (as inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 49(4) (with ss. 2(2), 5(2)))

C52Pt. A1 power to apply (with modifications) conferred by 2011 c. 25, s. 247A (as inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 45 (with ss. 2(2), 5(2)))

Chapter 1U.K.Introductory

A1OverviewU.K.

(1)This Part contains provision that enables an eligible company, in certain circumstances, to obtain a moratorium, giving it various protections from creditors set out in this Part.

(2)In this Chapter section A2 introduces Schedule ZA1 (which defines what is meant by an “eligible” company).

(3)Chapter 2 sets out how an eligible company may obtain a moratorium.

(4)Chapter 3 sets out for how long a moratorium has effect.

(5)Chapter 4 sets out the effects of a moratorium on the company and its creditors.

(6)Chapter 5 contains provision about the monitor.

(7)Chapter 6 contains provision about challenges.

(8)Chapter 7 contains provision about certain offences.

(9)Chapter 8 contains miscellaneous and general provision, including—

(a)special provision for certain kinds of company;

(b)definitions for the purposes of this Part;

(c)provision about regulations under this Part.

A2Eligible companiesU.K.

Schedule ZA1 contains provision for determining whether a company is an eligible company for the purposes of this Part.

Chapter 2U.K.Obtaining a moratorium

A3Obtaining a moratorium by filing or lodging documents at courtU.K.

(1)This section applies to an eligible company that—

(a)is not subject to an outstanding winding-up petition, and

(b)is not an overseas company.

(2)The directors of the company may obtain a moratorium for the company by filing the relevant documents with the court (for the relevant documents, see section A6).

(3)For the purposes of this Chapter a company is “subject to an outstanding winding-up petition” if—

(a)a petition for the winding up of the company has been presented, and

(b)the petition has not been withdrawn or determined.

Modifications etc. (not altering text)

A4Obtaining a moratorium for company subject to winding-up petitionU.K.

(1)This section applies to an eligible company that is subject to an outstanding winding-up petition.

(2)The directors of the company may apply to the court for a moratorium for the company.

(3)The application must be accompanied by the relevant documents (for the relevant documents, see section A6).

(4)On hearing the application the court may—

(a)make an order that the company should be subject to a moratorium, or

(b)make any other order which the court thinks appropriate.

(5)The court may make an order under subsection (4)(a) only if it is satisfied that a moratorium for the company would achieve a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being subject to a moratorium).

Modifications etc. (not altering text)

A5Obtaining a moratorium for other overseas companiesU.K.

(1)This section applies to an eligible company that—

(a)is not subject to an outstanding winding-up petition, and

(b)is an overseas company.

(2)The directors of the company may apply to the court for a moratorium for the company.

(3)The application must be accompanied by the relevant documents (for the relevant documents, see section A6).

(4)On hearing the application the court may—

(a)make an order that the company should be subject to a moratorium, or

(b)make any other order which the court thinks appropriate.

Modifications etc. (not altering text)

A6The relevant documentsU.K.

(1)For the purposes of this Chapter, “the relevant documents” are—

(a)a notice that the directors wish to obtain a moratorium,

(b)a statement from a qualified person (“the proposed monitor”) that the person—

(i)is a qualified person, and

(ii)consents to act as the monitor in relation to the proposed moratorium,

(c)a statement from the proposed monitor that the company is an eligible company,

(d)a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its debts, and

(e)a statement from the proposed monitor that, in the proposed monitor’s view, it is likely that a moratorium for the company would result in the rescue of the company as a going concern.

(2)Where it is proposed that more than one person should act as the monitor in relation to the proposed moratorium—

(a)each of them must make a statement under subsection (1)(b), (c) and (e), and

(b)the statement under subsection (1)(b) must specify—

(i)which functions (if any) are to be exercised by the persons acting jointly, and

(ii)which functions (if any) are to be exercised by any or all of the persons.

(3)The rules may make provision about the date on which a statement comprised in the relevant documents must be made.

(4)The Secretary of State may by regulations amend this section for the purposes of adding to the list of documents in subsection (1).

(5)Regulations under subsection (4) are subject to the affirmative resolution procedure.

Modifications etc. (not altering text)

A7Beginning of moratorium and appointment of monitorU.K.

(1)A moratorium for a company comes into force at the time at which—

(a)in the case of a company to which section A3 applies, the relevant documents are filed with the court under subsection (2) of that section;

(b)in the case of a company to which section A4 applies, an order is made under section A4(4)(a);

(c)in the case of a company to which section A5 applies, an order is made under section A5(4)(a).

(2)On the coming into force of a moratorium, the person or persons who made the statement mentioned in section A6(1)(b) become the monitor in relation to the moratorium.

A8Obligations to notify where moratorium comes into forceU.K.

(1)As soon as reasonably practicable after a moratorium for a company comes into force, the directors must notify the monitor of that fact.

(2)As soon as reasonably practicable after receiving a notice under subsection (1), the monitor must notify the following that a moratorium for the company has come into force—

(a)the registrar of companies,

(b)every creditor of the company of whose claim the monitor is aware,

(c)in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d)in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by section 126 of the Pensions Act 2004, the Board of the Pension Protection Fund.

(3)A notice under subsection (2) must specify—

(a)when the moratorium came into force, and

(b)when, subject to any alteration under or by virtue of any of the provisions mentioned in section A9(3) or (4), the moratorium will come to an end.

(4)If the directors fail to comply with subsection (1), any director who did not have a reasonable excuse for the failure commits an offence.

(5)If the monitor without reasonable excuse fails to comply with subsection (2), the monitor commits an offence.

Chapter 3U.K.Length of moratorium

Initial periodU.K.

A9End of the moratoriumU.K.

(1)A moratorium ends at the end of the initial period unless it is extended, or comes to an end sooner, under or by virtue of a provision mentioned in subsection (3) or (4).

(2)In this Chapter “the initial period”, in relation to a moratorium, means the period of 20 business days beginning with the business day after the day on which the moratorium comes into force.

(3)For provision under or by virtue of which a moratorium is or may be extended, see—

  • section A10 (extension by directors without creditor consent);

  • section A11 (extension by directors with creditor consent);

  • section A13 (extension by court on application of directors);

  • section A14 (extension while proposal for CVA pending);

  • section A15 (extension by court in course of other proceedings).

(4)For provision under or by virtue of which the moratorium is or may be terminated, see—

  • section A16 (termination on entry into insolvency procedure etc);

  • section A38 (termination by monitor);

  • section A42 or A44 (termination by court).

(5)A moratorium may not be extended under a provision mentioned in subsection (3) once it has come to an end.

(6)Where the application of two or more of the provisions mentioned in subsections (3) and (4) would produce a different length of moratorium, the provision that applies last is to prevail (irrespective of whether that results in a shorter or longer moratorium).

Extension of moratoriumU.K.

A10Extension by directors without creditor consentU.K.

(1)During the initial period, but after the first 15 business days of that period, the directors may extend the moratorium by filing with the court—

(a)a notice that the directors wish to extend the moratorium,

(b)a statement from the directors that all of the following that have fallen due have been paid or otherwise discharged—

(i)moratorium debts, and

(ii)pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see section A18),

(c)a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts, and

(d)a statement from the monitor that, in the monitor’s view, it is likely that the moratorium will result in the rescue of the company as a going concern.

(2)The rules may make provision about the date on which a statement mentioned in subsection (1) must be made.

(3)On the filing with the court of the documents mentioned in subsection (1), the moratorium is extended so that it ends at the end of the period—

(a)beginning immediately after the initial period ends, and

(b)ending with the 20th business day after the initial period ends.

Modifications etc. (not altering text)

A11Extension by directors with creditor consentU.K.

(1)At any time after the first 15 business days of the initial period the directors may, if they have obtained creditor consent, extend the moratorium by filing with the court—

(a)a notice that the directors wish to extend the moratorium,

(b)a statement from the directors that all of the following that have fallen due have been paid or otherwise discharged—

(i)moratorium debts, and

(ii)pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see section A18),

(c)a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts,

(d)a statement from the monitor that, in the monitor’s view, it is likely that the moratorium will result in the rescue of the company as a going concern, and

(e)a statement from the directors that creditor consent has been obtained, and of the revised end date for which that consent was obtained.

(2)The rules may make provision about the date on which a statement mentioned in subsection (1) must be made.

(3)On the filing with the court of the documents mentioned in subsection (1), the moratorium is extended so that it ends with the revised end date mentioned in the statement under subsection (1)(e).

(4)A moratorium may be extended under this section more than once.

Modifications etc. (not altering text)

A12Creditor consent for the purposes of section A11U.K.

(1)References in section A11 to creditor consent are to the consent of pre-moratorium creditors to a revised end date for the moratorium.

(2)The decision as to consent is to be made using a qualifying decision procedure.

(3)The revised end date must be a date before the end of the period of one year beginning with the first day of the initial period.

(4)In this section “pre-moratorium creditor” means a creditor in respect of a pre-moratorium debt—

(a)for which the company has a payment holiday during the moratorium (see section A18), and

(b)which has not been paid or otherwise discharged.

(5)In determining for the purposes of subsection (4) what counts as a pre-moratorium debt for which the company has a payment holiday during the moratorium, sections A18(3) and A53(1)(b) apply as if the references to the moratorium were to the moratorium as proposed to be extended.

(6)The Secretary of State may by regulations amend this section for the purposes of changing the definition of “pre-moratorium creditor”.

(7)Regulations under subsection (6) are subject to the affirmative resolution procedure.

A13Extension by court on application of directorsU.K.

(1)At any time after the first 15 business days of the initial period, the directors may apply to the court for an order that the moratorium be extended.

(2)The application must be accompanied by—

(a)a statement from the directors that all of the following that have fallen due have been paid or otherwise discharged—

(i)moratorium debts, and

(ii)pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see section A18),

(b)a statement from the directors that, in their view, the company is, or is likely to become, unable to pay its pre-moratorium debts,

(c)a statement from the directors as to whether pre-moratorium creditors (as defined by section A12(4) and (5)) have been consulted about the application and if not why not, and

(d)a statement from the monitor that, in the monitor’s view, it is likely that the moratorium will result in the rescue of the company as a going concern.

(3)The rules may make provision about the date on which a statement mentioned in subsection (2) must be made.

(4)On hearing the application the court may—

(a)make an order that the moratorium be extended to such date as is specified in the order, or

(b)make any other order which the court thinks appropriate.

(5)In deciding whether to make an order under subsection (4)(a) the court must, in particular, consider the following—

(a)the interests of pre-moratorium creditors, as defined by section A12(4) and (5), and

(b)the likelihood that the extension of the moratorium will result in the rescue of the company as a going concern.

(6)Subsection (7) applies where—

(a)an application under this section is made, and

(b)apart from that subsection, the moratorium would end at a time before the application has been disposed of.

(7)The moratorium—

(a)does not end at the time mentioned in subsection (6)(b), and

(b)instead, ends—

(i)in a case in which the court makes an order under subsection (4)(a), in accordance with the order;

(ii)otherwise, when the application is withdrawn or disposed of.

(8)A moratorium may be extended under this section more than once.

Modifications etc. (not altering text)

A14Extension while proposal for CVA pendingU.K.

(1)Subsection (2) applies where—

(a)at any time, the directors make a proposal under Part 1 (company voluntary arrangements), and

(b)apart from that subsection, the moratorium would end at a time before the proposal is disposed of.

(2)The moratorium—

(a)does not end at the time mentioned in subsection (1)(b), and

(b)instead, ends when the proposal is disposed of.

(3)For the purposes of this section a proposal under Part 1 is “disposed of” when any of the following takes place—

(a)the company and its creditors both decide under section 4 not to approve the voluntary arrangement contained in the proposal;

(b)the decisions taken by the company and its creditors under section 4 differ, and—

(i)the period for making an application under section 4A(3) expires and either no application has been made within that period or any application made within that period has been withdrawn, or

(ii)an application is made under section 4A(3) and that application is disposed of, or it is withdrawn after the expiry of the period for making an application under section 4A(3);

(c)the voluntary arrangement contained in the proposal takes effect under section 5;

(d)the proposal is withdrawn.

A15Extension by court in the course of other proceedingsU.K.

(1)Subsection (2) applies where—

(a)an application is made under section 896 or 901C(1) of the Companies Act 2006 (arrangements and reconstructions: court order for holding of meeting) in respect of a company, and

(b)during proceedings before a court in connection with the application, a moratorium for the company is in force.

(2)The court may make an order that the moratorium be extended to such date as is specified in the order.

Early termination on certain groundsU.K.

A16Company enters into insolvency procedure etcU.K.

(1)A moratorium comes to an end at any time at which the company—

(a)enters into a compromise or arrangement (see subsection (2)), or

(b)enters into a relevant insolvency procedure (see subsection (3)).

(2)For the purposes of this section a company enters into a compromise or arrangement if an order under section 899 or 901F of the Companies Act 2006 (court sanction for compromise or arrangement) comes into effect in relation to the company.

(3)For the purposes of this section a company enters into a relevant insolvency procedure if—

(a)a voluntary arrangement takes effect under section 5 in relation to the company,

(b)the company enters administration (within the meaning of Schedule B1 (see paragraph 1(2)(b) of that Schedule)),

(c)paragraph 44 of Schedule B1 (administration: interim moratorium) begins to apply in relation to the company, or

(d)the company goes into liquidation (see section 247).

Obligations to notify change in end of moratoriumU.K.

A17Obligations to notify change in end of moratoriumU.K.

(1)The table imposes obligations on the directors of a company to notify the monitor where a moratorium for the company is extended or comes to an end.

Where a moratorium is extended or comes to an end under or by virtue of the following provisionthe directors must
1Section A10Notify the monitor of the extension.
2Section A11Notify the monitor of the extension and of the revised end date.
3Section A13(4)Notify the monitor of the extension and provide the monitor with the court order under section A13(4).
4Section A13(7)(a)Notify the monitor of the extension.
5Section A13(7)(b)(ii)Notify the monitor that the moratorium has come to an end and of the date that it ended.
6Section A14(2)(a)Notify the monitor of the extension.
7Section A14(2)(b)Notify the monitor that the moratorium has come to an end and of the date that it ended.
8Section A15Notify the monitor of the extension and provide the monitor with any court order under section A15.
9Section A16Notify the monitor that the moratorium has come to an end.
10Section A42Notify the monitor that the moratorium has come to an end and provide the monitor with the court order under section A42.
11Section A44Notify the monitor that the moratorium has come to an end and provide the monitor with the court order under section A44.

(2)After receiving a notice under subsection (1), other than a notice under entry 4 or 6 of the table, the monitor must notify the relevant persons of when the moratorium ended or, subject to any alteration under or by virtue of any of the provisions mentioned in section A9(3) or (4), the moratorium will come to an end.

(3)After receiving a notice under entry 4 or 6 of the table, the monitor must notify the relevant persons.

(4)If a moratorium comes to an end under section A38 (termination by monitor), the monitor must notify the company and the relevant persons of when the moratorium ended.

(5)The rules may—

(a)make further provision about the timing of a notice required to be given under this section;

(b)require a notice to be accompanied by other documents.

(6)If the directors fail to comply with subsection (1), any director who did not have a reasonable excuse for the failure commits an offence.

(7)If the monitor without reasonable excuse fails to comply with any of subsections (2) to (4), the monitor commits an offence.

(8)In this section “the relevant persons” means—

(a)the registrar of companies,

(b)every creditor of the company of whose claim the monitor is aware,

(c)in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d)in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by section 126 of the Pensions Act 2004, the Board of the Pension Protection Fund.

Chapter 4U.K.Effects of moratorium

IntroductoryU.K.

A18Overview and construction of references to payment holidaysU.K.

(1)This Chapter makes provision about the main effects of a moratorium for a company.

(2)The provision made by this Chapter includes restrictions on the enforcement or payment of the debts that are defined by subsection (3) as pre-moratorium debts for which a company has a payment holiday during a moratorium.

(3)In this Part a reference to pre-moratorium debts for which a company has a payment holiday during a moratorium is to its pre-moratorium debts that have fallen due before the moratorium, or that fall due during the moratorium, except in so far as they consist of amounts payable in respect of—

(a)the monitor’s remuneration or expenses,

(b)goods or services supplied during the moratorium,

(c)rent in respect of a period during the moratorium,

(d)wages or salary arising under a contract of employment,

(e)redundancy payments, or

(f)debts or other liabilities arising under a contract or other instrument involving financial services.

(4)The rules may make provision as to what is, or is not, to count as the supply of goods or services for the purposes of subsection (3)(b).

(5)The Secretary of State may by regulations amend this section for the purposes of changing the list in subsection (3).

(6)Regulations under subsection (5) are subject to the affirmative resolution procedure.

(7)In this section—

  • “contract or other instrument involving financial services” has the meaning given by Schedule ZA2;

  • “monitor’s remuneration or expenses” does not include remuneration in respect of anything done by a proposed monitor before the moratorium begins;

  • “redundancy payment” means—

    (a)

    a redundancy payment under Part 11 of the Employment Rights Act 1996 or Part 12 of the Employment Rights (Northern Ireland) Order 1996, or

    (b)

    a payment made to a person who agrees to the termination of their employment in circumstances where they would have been entitled to a redundancy payment under that Part if dismissed;

  • “wages or salary” includes—

    (a)

    a sum payable in respect of a period of holiday (for which purpose the sum is to be treated as relating to the period by reference to which the entitlement to holiday accrued),

    (b)

    a sum payable in respect of a period of absence through illness or other good cause,

    (c)

    a sum payable in lieu of holiday, and

    (d)

    a contribution to an occupational pension scheme.

Publicity about moratoriumU.K.

A19Publicity about moratoriumU.K.

(1)During a moratorium, the company must, in any premises—

(a)where business of the company is carried on, and

(b)to which customers of the company or suppliers of goods or services to the company have access,

display, in a prominent position so that it may easily be read by such customers or suppliers, a notice containing the required information.

(2)During a moratorium, any websites of the company must state the required information.

(3)During a moratorium, every business document issued by or on behalf of the company must state the required information.

(4)For the purposes of subsections (1), (2) and (3), “the required information” is—

(a)that a moratorium is in force in relation to the company, and

(b)the name of the monitor.

(5)If subsection (1), (2) or (3) is contravened—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the contravention commits an offence.

(6)In this section “business document” means—

(a)an invoice,

(b)an order for goods or services,

(c)a business letter, and

(d)an order form,

whether in hard copy, electronic or any other form.

Effect on creditors etcU.K.

A20Restrictions on insolvency proceedings etcU.K.

(1)During a moratorium—

(a)no petition may be presented for the winding up of the company, except by the directors,

(b)no resolution may be passed for the voluntary winding up of the company under section 84(1)(a),

(c)a resolution for the voluntary winding up of the company under section 84(1)(b) may be passed only if the resolution is recommended by the directors,

(d)no order may be made for the winding up of the company, except on a petition by the directors,

(e)no administration application may be made in respect of the company, except by the directors,

(f)no notice of intention to appoint an administrator of the company under paragraph 14 or 22(1) of Schedule B1 may be filed with the court,

(g)no administrator of the company may be appointed under paragraph 14 or 22(1) of Schedule B1, and

(h)no administrative receiver of the company may be appointed.

(2)Subsection (1)(a) does not apply to an excepted petition; and subsection (1)(d) does not apply to an order on an excepted petition.

(3)For these purposes, “excepted petition” means a petition under—

(a)section 124A, 124B or 124C, or

(b)section 367 of the Financial Services and Markets Act 2000 on the ground mentioned in subsection (3)(b) of that section.

A21Restrictions on enforcement and legal proceedingsU.K.

(1)During a moratorium—

(a)a landlord or other person to whom rent is payable may not exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company, except with the permission of the court,

(b)in Scotland, a landlord or other person to whom rent is payable may not exercise a right of irritancy in relation to premises let to the company, except with the permission of the court,

(c)no steps may be taken to enforce any security over the company’s property except—

(i)steps to enforce a collateral security charge (within the meaning of the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979)),

(ii)steps to enforce security created or otherwise arising under a financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226)), or

(iii)steps taken with the permission of the court,

(d)no steps may be taken to repossess goods in the company’s possession under any hire-purchase agreement, except with the permission of the court, and

(e)no legal process (including legal proceedings, execution, distress or diligence) may be instituted, carried out or continued against the company or its property except—

(i)employment tribunal proceedings or any legal process arising out of such proceedings,

(ii)proceedings, not within sub-paragraph (i), involving a claim between an employer and a worker, or

(iii)a legal process instituted, carried out or continued with the permission of the court.

(2)An application may not be made for permission under subsection (1) for the purposes of enforcing a pre-moratorium debt for which the company has a payment holiday during the moratorium.

(3)An application may not be made for permission under subsection (1)(c), (d) or (e) with a view to obtaining—

(a)the crystallisation of a floating charge, or

(b)the imposition, by virtue of provision in an instrument creating a floating charge, of any restriction on the disposal of any property of the company.

(4)Permission of the court under subsection (1) may be given subject to conditions.

(5)Subsection (1)(c)(iii) is subject to section A23(1).

(6)In this section—

  • “agency worker” has the meaning given by section 13(2) of the Employment Relations Act 1999;

  • “employer”—

    (a)

    in relation to an agency worker, has the meaning given by section 13(2) of the Employment Relations Act 1999;

    (b)

    otherwise, has the meaning given by section 230(4) of the Employment Rights Act 1996;

  • “worker” means an individual who is—

    (a)

    a worker within the meaning of section 230(3) of the Employment Rights Act 1996, or

    (b)

    an agency worker.

Modifications etc. (not altering text)

A22Floating chargesU.K.

(1)This section applies where there is an uncrystallised floating charge on the property of a company for which a moratorium is in force.

(2)During the moratorium, the holder of the floating charge may not give any notice which would have the effect of—

(a)causing the floating charge to crystallise, or

(b)causing the imposition, by virtue of provision in the instrument creating the charge, of any restriction on the disposal of property of the company.

(3)No other event occurring during the moratorium is to have the effect mentioned in subsection (2)(a) or (b).

(4)Subsection (5) applies where—

(a)the holder of a floating charge (“the chargee”) is prevented by subsection (2) from giving a notice mentioned there during the moratorium, and

(b)under the terms of the floating charge, the time for giving such a notice ends during the moratorium or before the chargee is given notice of the end of the moratorium under section A17.

(5)The chargee may give notice later than is required under the terms of the floating charge, but only if the chargee does so as soon as is practicable after—

(a)the end of the moratorium, or

(b)if later, the day on which the chargee is notified of the end of the moratorium.

(6)Where—

(a)subsection (3) prevents an event which occurs during the moratorium from having the effect mentioned there, and

(b)the holder of the floating charge gives notice of the event to the company as soon as is practicable after—

(i)the end of the moratorium, or

(ii)if later, the day on which the chargee is notified of the end of the moratorium,

the event is to be treated as if it had occurred when the notice was given.

(7)This section does not apply in relation to a floating charge that is—

(a)a collateral security (as defined by section A27);

(b)a market charge (as defined by section A27);

(c)a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));

(d)a system-charge (as defined by section A27).

A23Enforcement of security granted during moratoriumU.K.

(1)Security granted by a company during a moratorium in relation to the company may be enforced only if the monitor consented to the grant of security under section A26.

(2)See also section A21(1)(c), which restricts enforcement during a moratorium.

Notification of insolvency proceedingsU.K.

A24Duty of directors to notify monitor of insolvency proceedings etcU.K.

(1)The directors of a company must notify the monitor before taking any of the following steps during a moratorium—

(a)presenting a petition for the winding up of the company;

(b)making an administration application in respect of the company;

(c)appointing an administrator under paragraph 22(2) of Schedule B1.

(2)The directors of a company must notify the monitor if, during a moratorium for the company, they recommend that the company passes a resolution for voluntary winding up under section 84(1)(b).

(3)The rules may make provision about the timing of a notice required to be given under subsection (1) or (2).

(4)If the directors fail to comply with subsection (1) or (2), any director who did not have a reasonable excuse for the failure commits an offence.

Restrictions on transactionsU.K.

A25Restrictions on obtaining creditU.K.

(1)During a moratorium, the company may not obtain credit to the extent of £500 or more from a person unless the person has been informed that a moratorium is in force in relation to the company.

(2)The reference to the company obtaining credit includes—

(a)the company entering into a conditional sale agreement in accordance with which goods are to be sold to the company,

(b)the company entering into any other form of hire-purchase agreement under which goods are to be bailed (in Scotland, hired) to the company, and

(c)the company being paid in advance (whether in money or otherwise) for the supply of goods or services.

(3)If a company contravenes subsection (1)—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the obtaining of the credit commits an offence.

A26Restrictions on grant of security etcU.K.

(1)During a moratorium, the company may grant security over its property only if the monitor consents.

(2)The monitor may give consent under subsection (1) only if the monitor thinks that the grant of security will support the rescue of the company as a going concern.

(3)In deciding whether to give consent under subsection (1), the monitor is entitled to rely on information provided by the company unless the monitor has reason to doubt its accuracy.

(4)If the company grants security over its property during the moratorium otherwise than as authorised by subsection (1)—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the grant of the security commits an offence.

(5)For the consequences of a company granting security over its property in contravention of subsection (1), see also section A23.

(6)The monitor may not give consent under this section if the granting of security is an offence under section A27.

A27Prohibition on entering into market contracts etcU.K.

(1)If a company enters into a transaction to which this section applies during a moratorium for the company—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the company to enter into the transaction commits an offence.

(2)A company enters into a transaction to which this section applies if it—

(a)enters into a market contract,

(b)enters into a financial collateral arrangement,

(c)gives a transfer order,

(d)grants a market charge or a system-charge, or

(e)provides any collateral security.

(3)Where during the moratorium a company enters into a transaction to which this section applies, nothing done by or in pursuance of the transaction is to be treated as done in contravention of any of sections A19, A21, A25, A26 and A28 to A32.

(4)In this section—

  • “collateral security” has the same meaning as in the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 (S.I. 1999/2979);

  • “financial collateral arrangement” has the same meaning as in the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226);

  • “market charge” has the same meaning as in Part 7 of the Companies Act 1989;

  • “market contract” has the same meaning as in Part 7 of the Companies Act 1989;

  • “system-charge” has the meaning given by the Financial Markets and Insolvency Regulations 1996 (S.I. 1996/1469);

  • “transfer order” has the same meaning as in the Financial Markets and Insolvency (Settlement Finality) Regulations 1999.

Restrictions on payments and disposal of propertyU.K.

A28Restrictions on payment of certain pre-moratorium debtsU.K.

(1)During a moratorium, the company may make one or more relevant payments to a person that (in total) exceed the specified maximum amount only if—

(a)the monitor consents,

(b)the payment is in pursuance of a court order, or

(c)the payment is required by section A31(3) or A32(3).

(2)In subsection (1)—

  • “relevant payments” means payments in respect of pre-moratorium debts for which the company has a payment holiday during the moratorium (see section A18);

  • “specified maximum amount” means an amount equal to the greater of—

    (a)

    £5000, and

    (b)

    1% of the value of the debts and other liabilities owed by the company to its unsecured creditors when the moratorium began, to the extent that the amount of such debts and liabilities can be ascertained at that time.

(3)The monitor may give consent under subsection (1)(a) only if the monitor thinks that it will support the rescue of the company as a going concern.

(4)In deciding whether to give consent under subsection (1)(a), the monitor is entitled to rely on information provided by the company unless the monitor has reason to doubt its accuracy.

(5)If the company makes a payment to which subsection (1) applies otherwise than as authorised by that subsection—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the payment commits an offence.

A29Restrictions on disposal of propertyU.K.

(1)During a moratorium, the company may dispose of its property only if authorised by subsection (2) or (5).

(2)In the case of property that is not subject to a security interest, the company may dispose of the property if—

(a)the disposal is made in the ordinary way of the company’s business,

(b)the monitor consents, or

(c)the disposal is in pursuance of a court order.

(3)The monitor may give consent under subsection (2)(b) only if the monitor thinks that it will support the rescue of the company as a going concern.

(4)In deciding whether to give consent under subsection (2)(b), the monitor is entitled to rely on information provided by the company unless the monitor has reason to doubt its accuracy.

(5)In the case of property that is subject to a security interest, the company may dispose of the property if the disposal is in accordance with—

(a)section A31(1), or

(b)the terms of the security.

(6)If the company disposes of its property during the moratorium otherwise than as authorised by this section—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the disposal commits an offence.

Modifications etc. (not altering text)

C66Ss. A29-A32 excluded by S.I. 2015/912, reg. 37(12A)(d) (as inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 55(4) (with ss. 2(2), 5(2)))

A30Restrictions on disposal of hire-purchase propertyU.K.

(1)During a moratorium, the company may dispose of any goods in the possession of the company under a hire-purchase agreement only if the disposal is in accordance with —

(a)section A32(1), or

(b)the terms of the agreement.

(2)If the company disposes of goods in the possession of the company under a hire-purchase agreement otherwise than as authorised by subsection (1)—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the disposal commits an offence.

Modifications etc. (not altering text)

C66Ss. A29-A32 excluded by S.I. 2015/912, reg. 37(12A)(d) (as inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 55(4) (with ss. 2(2), 5(2)))

Disposals of property free from charges etcU.K.

A31Disposal of charged property free from chargeU.K.

(1)During a moratorium, the company may, with the permission of the court, dispose of property which is subject to a security interest as if it were not subject to the security interest.

(2)The court may give permission under subsection (1) only if the court thinks that it will support the rescue of the company as a going concern.

(3)Where the court gives permission under subsection (1) other than in relation to a floating charge, the company must apply the following towards discharging the sums secured—

(a)the net proceeds of disposal of the property, and

(b)any money required to be added to the net proceeds so as to produce the amount determined by the court as the net amount which would be realised on a sale of the property in the open market by a willing vendor.

(4)Where the permission relates to two or more security interests, the condition in subsection (3) requires the application of money in the order of the priorities of the security interests.

(5)Where property subject to a floating charge is disposed of under subsection (1), the holder of the floating charge has the same priority in respect of acquired property as they had in respect of the property disposed of.

(6)In subsection (5) “acquired property” means property of the company which directly or indirectly represents the property disposed of.

(7)Where the court makes an order giving permission under subsection (1), the directors must, within the period of 14 days beginning with the date of the order, send a copy of it to the registrar of companies.

(8)If the directors fail to comply with subsection (7), any director who did not have a reasonable excuse for the failure commits an offence.

(9)Where property in Scotland is disposed of under subsection (1), the company must grant to the disponee an appropriate document of transfer or conveyance of the property, and—

(a)that document, or

(b)recording, intimation or registration of that document (where recording, intimation or registration of the document is a legal requirement for completion of title to the property),

has the effect of disencumbering the property of or, as the case may be, freeing the property from, the security interest.

(10)If a company fails to comply with subsection (3) or (9)—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the failure commits an offence.

(11)Subsection (1) does not apply in relation to any property which is subject to a financial collateral arrangement, a market charge, a system-charge or a collateral security (as defined by section A27).

Modifications etc. (not altering text)

C66Ss. A29-A32 excluded by S.I. 2015/912, reg. 37(12A)(d) (as inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 55(4) (with ss. 2(2), 5(2)))

A32Disposal of hire-purchase propertyU.K.

(1)During a moratorium, the company may, with the permission of the court, dispose of goods which are in the possession of the company under a hire-purchase agreement as if all of the rights of the owner under the agreement were vested in the company.

(2)The court may give permission under subsection (1) only if the court thinks that it will support the rescue of the company as a going concern.

(3)Where the court gives permission under subsection (1), the company must apply the following towards discharging the sums payable under the hire-purchase agreement—

(a)the net proceeds of disposal of the goods, and

(b)any additional money required to be added to the net proceeds so as to produce the amount determined by the court as the net amount which would be realised on a sale of the goods in the open market by a willing vendor.

(4)If a company fails to comply with subsection (3)—

(a)the company commits an offence, and

(b)any officer of the company who without reasonable excuse authorised or permitted the failure commits an offence.

(5)Where the court makes an order giving permission under subsection (1), the directors must, within the period of 14 days beginning with the date of the order, send a copy of it to the registrar of companies.

(6)If the directors fail to comply with subsection (5), any director who did not have a reasonable excuse for the failure commits an offence.

(7)In Scotland, where goods in the possession of the company under a hire-purchase agreement are disposed of under subsection (1), the disposal has the effect of extinguishing, as against the disponee, all rights of the owner of the goods under the agreement.

Modifications etc. (not altering text)

C66Ss. A29-A32 excluded by S.I. 2015/912, reg. 37(12A)(d) (as inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 55(4) (with ss. 2(2), 5(2)))

Effect of contravention of certain provisions of ChapterU.K.

A33Contravention of certain requirements imposed under this ChapterU.K.

The fact that a company contravenes section A19 or any of sections A25 to A32 does not—

(a)make any transaction void or unenforceable, or

(b)affect the validity of any other thing.

CHAPTER 5U.K.The monitor

A34Status of monitorU.K.

The monitor in relation to a moratorium is an officer of the court.

A35MonitoringU.K.

(1)During a moratorium, the monitor must monitor the company’s affairs for the purpose of forming a view as to whether it remains likely that the moratorium will result in the rescue of the company as a going concern.

(2)In forming the view mentioned in subsection (1), the monitor is entitled to rely on information provided by the company, unless the monitor has reason to doubt its accuracy.

Modifications etc. (not altering text)

A36Provision of information to monitorU.K.

(1)The monitor may require the directors of the company to provide any information required by the monitor for the purpose of carrying out the monitor’s functions.

(2)The directors must comply with a requirement to provide information as soon as practicable.

(3)For the potential consequences of failing to comply with a requirement to provide information, see section A38.

A37Application by monitor for directionsU.K.

The monitor in relation to a moratorium may apply to the court for directions about the carrying out of the monitor’s functions.

A38Termination of moratorium by monitorU.K.

(1)The monitor must bring a moratorium to an end by filing a notice with the court if—

(a)the monitor thinks that the moratorium is no longer likely to result in the rescue of the company as a going concern,

(b)the monitor thinks that the objective of rescuing the company as a going concern has been achieved,

(c)the monitor thinks that, by reason of a failure by the directors to comply with a requirement under section A36, the monitor is unable properly to carry out the monitor’s functions, or

(d)the monitor thinks that the company is unable to pay any of the following that have fallen due—

(i)moratorium debts;

(ii)pre-moratorium debts for which the company does not have a payment holiday during the moratorium (see section A18).

(2)The rules may provide for debts that are to be disregarded for the purposes of subsection (1)(d).

(3)On the filing with the court of a notice under subsection (1), the moratorium comes to an end.

(4)The rules may make provision about the timing of a notice required to be given under subsection (1).

(5)The Secretary of State may by regulations amend this section for the purposes of changing the circumstances in which the monitor must bring a moratorium to an end under subsection (1).

(6)Regulations under subsection (5) are subject to the affirmative resolution procedure.

(7)See also section A17 (obligations to notify change in end of moratorium).

Modifications etc. (not altering text)

A39Replacement of monitor or appointment of additional monitorU.K.

(1)The court may make an order authorising the appointment of a qualified person to act as the monitor in relation to a moratorium instead of, or in addition to, a person who already acts as the monitor.

(2)The court may make an order providing that a person ceases to act as the monitor in relation to a moratorium.

(3)An order under subsection (1) or (2) may be made only on an application by the directors or the monitor.

(4)The court may make an order authorising the appointment of a monitor under subsection (1) only if the person has provided the court with a statement that the person—

(a)is a qualified person, and

(b)consents to act as the monitor in relation to the moratorium.

(5)Where it is proposed that more than one person should act as the monitor in relation to the moratorium, the statement under subsection (4) must specify—

(a)which functions (if any) are to be exercised by the persons acting jointly, and

(b)which functions (if any) are to be exercised by any or all of the persons.

(6)The rules may make provision about the date on which the statement under subsection (4) must be made.

(7)Where the court makes an order under subsection (1) or (2) the person begins to act as the monitor, or ceases to act as the monitor, in relation to the moratorium at the time specified in, or determined in accordance with, the order (“the relevant time”).

(8)As soon as reasonably practicable after the relevant time, the monitor must notify the following of the effect of the order—

(a)the registrar of companies,

(b)every creditor of the company of whose claim the monitor is aware,

(c)in a case where the company is or has been an employer in respect of an occupational pension scheme that is not a money purchase scheme, the Pensions Regulator, and

(d)in a case where the company is an employer in respect of such a pension scheme that is an eligible scheme within the meaning given by section 126 of the Pensions Act 2004, the Board of the Pension Protection Fund.

(9)If the monitor without reasonable excuse fails to comply with subsection (8), the monitor commits an offence.

A40Application of Part where two or more persons act as monitorU.K.

(1)Where two or more persons act jointly as the monitor—

(a)a reference in this Act to the monitor is a reference to those persons acting jointly;

(b)where an offence of omission is committed by the monitor, each of the persons appointed to act jointly—

(i)commits the offence, and

(ii)may be proceeded against and punished individually.

(2)Where persons act jointly in respect of only some of the functions of the monitor, subsection (1) applies only in relation to those functions.

(3)Where two or more persons act concurrently as the monitor a reference in this Act to the monitor is a reference to any of the persons appointed (or any combination of them).

A41Presumption of validityU.K.

An act of the monitor is valid in spite of a defect in the monitor’s appointment or qualification.

Chapter 6U.K.Challenges

A42Challenge to monitor’s actionsU.K.

(1)Any of the persons specified below may apply to the court on the ground that an act, omission or decision of the monitor during a moratorium has unfairly harmed the interests of the applicant.

(2)The persons who may apply are—

(a)a creditor, director or member of the company, or

(b)any other person affected by the moratorium.

(3)An application under subsection (1) may be made during the moratorium or after it has ended.

(4)On an application under subsection (1) the court may—

(a)confirm, reverse or modify any act or decision of the monitor,

(b)give the monitor directions, or

(c)make such other order as it thinks fit (but may not, under this paragraph, order the monitor to pay any compensation).

(5)Where an application under subsection (1) relates to a failure by the monitor to bring the moratorium to an end under section A38(1), an order under subsection (4) may, in particular, bring the moratorium to an end and make such consequential provision as the court thinks fit.

(6)Where an application under subsection (1) relates to the monitor bringing a moratorium to an end under section A38(1), an order under subsection (4) may, in particular, provide that the moratorium is not to be taken into account for the purposes of paragraph 2(1)(b) of Schedule ZA1 (company not eligible for moratorium if moratorium in force within previous 12 months).

(7)In making an order under subsection (4) the court must have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.

(8)See also section A17 (obligations to notify change in end of moratorium).

A43Challenges to monitor remuneration in insolvency proceedingsU.K.

(1)The rules may confer on an administrator or liquidator of a company the right to apply to the court on the ground that remuneration charged by the monitor in relation to a prior moratorium for the company was excessive.

(2)Rules under subsection (1) may (among other things) make provision as to—

(a)time limits;

(b)disposals available to the court;

(c)the treatment of costs (or, in Scotland, the expenses) of the application in the administration or winding up.

A44Challenge to directors’ actionsU.K.

(1)A creditor or member of a company may apply to the court for an order under this section on the ground that—

(a)during a moratorium, the company’s affairs, business and property are being or have been managed by the directors in a manner which has unfairly harmed the interests of its creditors or members generally or of some part of its creditors or members (including at least the applicant), or

(b)any actual or proposed act or omission of the directors during a moratorium causes or would cause such harm.

(2)An application under subsection (1) may be made during the moratorium or after it has ended.

(3)On an application under subsection (1) the court may make such order as it thinks fit.

(4)An order under subsection (3) 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 applicant or to do an act which the applicant has complained they have omitted to do,

(c)require a decision of the company’s creditors to be sought (using a qualifying decision procedure) on such matters as the court may direct, or

(d)bring the moratorium to an end and make such consequential provision as the court thinks fit.

(5)In making an order under subsection (3) the court must have regard to the need to safeguard the interests of persons who have dealt with the company in good faith and for value.

(6)See also section A17 (obligations to notify change in end of moratorium).

A45Challenge brought by Board of the Pension Protection FundU.K.

(1)This section applies where—

(a)a moratorium—

(i)is in force in relation to a company that is an employer in respect of an eligible scheme, or

(ii)is or has been in force in relation to a company that has been an employer in respect of an eligible scheme at any time during the moratorium, and

(b)the trustees or managers of the scheme are a creditor of the company.

(2)The Board of the Pension Protection Fund may make any application under section A42(1) or A44(1) that could be made by the trustees or managers as a creditor.

(3)For the purposes of such an application, any reference in section A42(1) or A44(1) to the interests of the applicant is to be read as a reference to the interests of the trustees or managers as a creditor.

(4)In this section “eligible scheme” has the meaning given by section 126 of the Pensions Act 2004.

CHAPTER 7U.K.Offences: general

A46Offence of fraud etc during or in anticipation of moratoriumU.K.

(1)An officer of a company commits an offence if, during a moratorium for the company or at any time within the period of 12 months ending with the day on which a moratorium for the company comes into force, the officer—

(a)does any of the things mentioned in subsection (2), or

(b)was privy to the doing by others of any of the things mentioned in subsection (2)(c), (d) and (e).

(2)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,

(b)fraudulently removing any part of the company’s property to the value of £500 or more,

(c)concealing, destroying, mutilating or falsifying any document affecting or relating to the company’s property or affairs,

(d)making any false entry in any document affecting or relating to the company’s property or affairs,

(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).

(3)It is a defence—

(a)for a person charged with an offence under subsection (1) in respect of any of the things mentioned in subsection (2)(a) or (f) to prove that the person had no intent to defraud, and

(b)for a person charged with an offence under subsection (1) in respect of any of the things mentioned in subsection (2)(c) or (d) to prove that the person had no intent to conceal the state of affairs of the company or to defeat the law.

(4)Where a person pawns, pledges or disposes of any property of a company in circumstances which amount to an offence under subsection (1), every person who takes in pawn or pledge, or otherwise receives, the property commits an offence if the person knows it to be pawned, pledged or disposed of in circumstances which—

(a)amount to an offence under subsection (1), or

(b)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 subsection (1).

(5)In this section, “officer” includes a shadow director.

A47Offence of false representation etc to obtain a moratoriumU.K.

(1)An officer of a company commits an offence if, for the purpose of obtaining a moratorium for the company or an extension of a moratorium for the company, the officer—

(a)makes any false representation, or

(b)fraudulently does, or omits to do, anything.

(2)Subsection (1) applies even if no moratorium or extension is obtained.

(3)In this section, “officer” includes a shadow director.

A48Prosecution of delinquent officers of companyU.K.

(1)This section applies where a moratorium has been obtained for a company.

(2)If it appears to the monitor that any past or present officer of the company has committed an offence in connection with the moratorium, the monitor must 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 monitor and relating to the matter in question) as the authority requires.

(3)In subsection (2), “the appropriate authority”—

(a)in the case of a company registered in England and Wales, means the Secretary of State,

(b)in the case of a company registered in Scotland, means the Lord Advocate, and

(c)in the case of an unregistered company means—

(i)if it has a principal place of business in England and Wales but not Scotland, the Secretary of State,

(ii)if it has a principal place of business in Scotland but not England and Wales, the Lord Advocate,

(iii)if it has a principal place of business in both England and Wales and Scotland, the Secretary of State and the Lord Advocate, and

(iv)if it does not have a principal place of business in England and Wales or Scotland, the Secretary of State.

(4)Where a matter is reported to the Secretary of State under subsection (2), the Secretary of State may, for the purpose of investigating the matter and such other matters relating to the affairs of the company as appear to the Secretary of State to require investigation, exercise any of the powers which are exercisable by inspectors appointed under section 431 or 432 of the Companies Act 1985.

(5)For the purpose of such an investigation any obligation imposed on a person by any provision of the Companies Acts 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 the Secretary of State’s investigation.

(6)Where a question is put to a person in exercise of the powers conferred by subsection (4), the person’s answer may be used in evidence against them.

(7)However, in criminal proceedings in which the person is charged with an offence other than a false statement offence—

(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 the person.

(8)In subsection (7) “false statement offence” means—

(a)an offence under section 2 or 5 of the 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 Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).

(9)Where a prosecuting authority institutes criminal proceedings following any report under subsection (2), the monitor, and every officer and agent of the company past and present (other than the defendant or defender), must give the authority all assistance in connection with the prosecution which they are reasonably able to give.

(10)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.

(11)The court may, on the application of the prosecuting authority, direct a person who has failed to comply with subsection (9) to comply with it.

Chapter 8U.K.Miscellaneous and general

Special rules for certain kinds of company etcU.K.

A49Regulated companies: modifications to this PartU.K.

(1)For the purposes of sections A3 and A4 as they apply in relation to a regulated company, section A6(1) has effect as if the documents listed there included a reference to the written consent of the appropriate regulator to the appointment of the proposed monitor.

(2)The remaining provisions of this section apply in relation to a moratorium for a regulated company.

(3)Any notice under section A8(2), A17(2) to (4) or A39(8) must also be sent by the monitor to the appropriate regulator.

(4)The directors must give the appropriate regulator notice of any qualifying decision procedure by which a decision of the company’s creditors is sought for the purposes of section A12(2) or A44(4)(c).

(5)If the directors fail to comply with subsection (4), any director who did not have a reasonable excuse for the failure commits an offence.

(6)The appropriate regulator, or a person appointed by the appropriate regulator, may in the way provided for by the rules, participate (but not vote) in any qualifying decision procedure by which a decision of the company’s creditors is sought for the purposes of this Part.

(7)The appropriate regulator is entitled to be heard on any application to the court for permission under section A31(1) or A32(1) (disposal of charged property, etc).

(8)The court may make an order under section A39(1) only if the appropriate regulator has given its written consent to the appointment of the proposed monitor.

(9)The persons who may apply to the court under section A39(3), A42(1) or A44(1) include the appropriate regulator.

(10)If a person other than a regulator applies to the court under section A39(3), A42(1) or A44(1) the appropriate regulator is entitled to be heard on the application.

(11)If either regulator makes an application to the court under section A39(3), A42(1) or A44(1) in relation to a PRA-regulated company, the other regulator is entitled to be heard on the application.

(12)This section does not affect any right that the appropriate regulator has (apart from this section) as a creditor of a regulated company.

(13)In this section—

  • “the appropriate regulator” means—

    (a)

    where the regulated company is a PRA-regulated company, each of the Financial Conduct Authority and the Prudential Regulation Authority, and

    (b)

    where the regulated company is not a PRA-regulated company, the Financial Conduct Authority;

  • “PRA-authorised person” has the meaning given by section 2B(5) of the Financial Services and Markets Act 2000;

  • “PRA-regulated company” means a regulated company which—

    (a)

    is, or has been, a PRA-authorised person,

    (b)

    is, or has been, an appointed representative within the meaning given by section 39 of the Financial Services and Markets Act 2000, whose principal (or one of whose principals) is, or was, a PRA-authorised person, or

    (c)

    is carrying on, or has carried on, a PRA-regulated activity (within the meaning of section 22A of that Act) in contravention of the general prohibition;

  • “regulated activity” has the meaning given by section 22 of the Financial Services and Markets Act 2000, taken with Schedule 2 to that Act and any order under that section;

  • “regulated company” means a company which—

    (a)

    is, or has been, an authorised person within the meaning given by section 31 of the 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 in contravention of the general prohibition within the meaning given by section 19 of that Act;

  • “regulator” means the Financial Conduct Authority or the Prudential Regulation Authority.

(14)The Secretary of State may by regulations amend this section for the purposes of changing the definition of “regulated company” in subsection (13).

(15)Regulations under subsection (14) are subject to the affirmative resolution procedure.

A50Power to modify this Part etc in relation to certain companiesU.K.

(1)The Secretary of State may by regulations make provision under the law of England and Wales or Scotland—

(a)to modify this Part as it applies in relation to a company for which there is a special administration regime, or

(b)in connection with the interaction between this Part and any other insolvency procedure in relation to such a company.

(2)The Welsh Ministers may by regulations make provision under the law of England and Wales—

(a)to modify this Part as it applies in relation to a company that is a social landlord registered under Part 1 of the Housing Act 1996, or

(b)make provision in connection with the interaction between this Part and any other insolvency procedure in relation to such a company.

(3)The Scottish Ministers may by regulations make provision under the law of Scotland—

(a)to modify this Part as it applies in relation to a company that is a social landlord registered under Part 2 of the Housing (Scotland) Act 2010 (asp 17), or

(b)make provision in connection with the interaction between this Part and any other insolvency procedure in relation to such a company.

(4)The Secretary of State may, by regulations, make any provision under the law of England and Wales, Scotland or Northern Ireland that appears to the Secretary of State to be appropriate in view of provision made under subsection (1), (2) or (3).

(5)The power in subsection (1), (2), (3) or (4) may, in particular, be used to amend, repeal, revoke or otherwise modify any provision made by an enactment.

(6)Regulations under subsection (1) or (4) are subject to the affirmative resolution procedure.

(7)A statutory instrument containing regulations under subsection (2) may not be made unless a draft of the statutory instrument containing them has been laid before and approved by a resolution of Senedd Cymru.

(8)Regulations made by the Scottish Ministers under subsection (3) are subject to the affirmative procedure (see section 29 of the Interpretation and Legislative Reform (Scotland) Act 2010 (asp 10)).

(9)In this section—

  • “insolvency procedure” includes—

    (a)

    in relation to subsection (1)(b), the provision made by sections 143A to 159 of the Housing and Regeneration Act 2008;

    (b)

    in relation to subsection (2)(b), the provision made by sections 39 to 50 of the Housing Act 1996;

    (c)

    in relation to subsection (3)(b), the provision made by Part 7 of the Housing (Scotland) Act 2010;

  • “ordinary administration” means the insolvency procedure provided for by Schedule B1;

  • “special administration regime” means provision made by an enactment for an insolvency procedure that—

    (a)

    is similar or corresponds to ordinary administration, and

    (b)

    provides for the administrator to have one or more special objectives instead of or in addition to the objectives of ordinary administration.

A51Power to make provision in connection with pension schemesU.K.

(1)The Secretary of State may by regulations provide that, in a case where—

(a)a moratorium—

(i)is in force in relation to a company that is an employer in respect of an eligible scheme, or

(ii)is or has been in force in relation to a company that has been an employer in respect of an eligible scheme at any time during the moratorium, and

(b)the trustees or managers of the scheme are a creditor of the company,

the Board of the Pension Protection Fund may exercise any of the following rights.

(2)The rights are those which are exercisable by the trustees or managers as a creditor of the company under or by virtue of—

(a)section A12, or

(b)a court order under section A44(4)(c).

(3)Regulations under subsection (1) may provide that the Board may exercise any such rights—

(a)to the exclusion of the trustees or managers of the scheme, or

(b)in addition to the exercise of those rights by the trustees or managers of the scheme.

(4)Regulations under subsection (1)—

(a)may specify conditions that must be met before the Board may exercise any such rights;

(b)may provide for any such rights to be exercisable by the Board for a specified period;

(c)may make provision in connection with any such rights ceasing to be so exercisable at the end of such a period.

(5)Regulations under subsection (1) are subject to the affirmative resolution procedure.

(6)In this section “eligible scheme” has the meaning given by section 126 of the Pensions Act 2004.

Floating chargesU.K.

A52Void provisions in floating charge documentsU.K.

(1)A provision in an instrument creating a floating charge is void if it provides for the obtaining of a moratorium, or anything done with a view to obtaining a moratorium, to be—

(a)an event causing the floating charge to crystallise,

(b)an event causing restrictions which would not otherwise apply to be imposed on the disposal of property by the company, or

(c)a ground for the appointment of a receiver.

(2)The reference in subsection (1) to anything done with a view to obtaining a moratorium includes any preliminary decision or investigation.

(3)In subsection (1) “receiver” includes a manager and a person who is appointed both receiver and manager.

(4)Subsection (1) does not apply to a provision in an instrument creating a floating charge that is—

(a)a collateral security (as defined by section A27);

(b)a market charge (as defined by section A27);

(c)a security financial collateral arrangement (within the meaning of regulation 3 of the Financial Collateral Arrangements (No. 2) Regulations 2003 (S.I. 2003/3226));

(d)a system-charge (as defined by section A27).

Interpretation of this PartU.K.

A53Meaning of “pre-moratorium debt” and “moratorium debt”U.K.

(1)In this Part “pre-moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—

(a)any debt or other liability to which the company becomes subject before the moratorium comes into force, or

(b)any debt or other liability to which the company has become or may become subject during the moratorium by reason of any obligation incurred before the moratorium comes into force,

but this is subject to subsection (3).

(2)In this Part “moratorium debt”, in relation to a company for which a moratorium is or has been in force, means—

(a)any debt or other liability to which the company becomes subject during the moratorium, other than by reason of an obligation incurred before the moratorium came into force, or

(b)any debt or other liability to which the company has become or may become subject after the end of the moratorium by reason of an obligation incurred during the moratorium,

but this is subject to subsection (3).

(3)For the purposes of this Part—

(a)a liability in tort or delict is a “pre-moratorium debt” if either—

(i)the cause of action has accrued before the moratorium comes into force, or

(ii)all the elements necessary to establish the cause of action exist before the moratorium comes into force except for actionable damage;

(b)a liability in tort or delict is a “moratorium debt” if it does not fall within paragraph (a) and either—

(i)the cause of action has accrued during the moratorium, or

(ii)all the elements necessary to establish the cause of action exist before the moratorium comes to an end except for actionable damage.

(4)The Secretary of State may by regulations amend this section for the purposes of changing the definition of “pre-moratorium debt” or “moratorium debt” in this Part.

(5)Regulations under subsection (4) are subject to the affirmative resolution procedure.

A54Interpretation of this Part: generalU.K.

(1)In this Part—

  • “company” means—

    (a)

    a company registered under the Companies Act 2006 in England and Wales or Scotland, or

    (b)

    an unregistered company that may be wound up under Part 5 of this Act;

  • “the court” means such court as is prescribed;

  • “eligible”, in relation to a company, has the meaning given by Schedule ZA1;

  • “employer”, in relation to a pension scheme—

    (a)

    in sections A8(2)(c), A17(8)(c) and A39(8)(c), means an employer within the meaning of section 318(1) of the Pensions Act 2004;

    (b)

    elsewhere in this Part, has the same meaning that it has for the purposes of Part 2 of the Pensions Act 2004 (see section 318(1) and (4) of that Act);

  • “enactment” includes an Act of the Scottish Parliament and an instrument made under such an Act;

  • “hire-purchase agreement” includes a conditional sale agreement, a chattel leasing agreement and a retention of title agreement;

  • “liability” means (subject to subsection (2)) a liability to pay money or money’s worth, including any liability under an enactment, a liability for breach of trust, any liability in contract, tort, delict or bailment, and any liability arising out of an obligation to make restitution;

  • “money purchase scheme” has the meaning given by section 181(1) of the Pension Schemes Act 1993;

  • “the monitor”, in relation to a moratorium, means the person who has the functions of the monitor in relation to the moratorium (see also section A40 for cases where two or more persons act as the monitor);

  • “moratorium” means a moratorium under this Part;

  • “moratorium debt” has the meaning given by section A53;

  • “occupational pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;

  • “pension scheme” has the meaning given by section 1 of the Pension Schemes Act 1993;

  • “pre-moratorium debt” has the meaning given by section A53;

  • “qualified person” means a person qualified to act as an insolvency practitioner;

  • “unable to pay its debts”—

    (a)

    in relation to a registered company, has the same meaning as in Part 4 (see section 123);

    (b)

    in relation to an unregistered company, has the same meaning as in Part 5 (see sections 222 to 224).

(2)For the purposes of references in any provision of this Part to a debt or liability it is immaterial whether the debt or liability is present or future, whether it is certain or contingent, or whether its amount is fixed or liquidated, or is capable of being ascertained by fixed rules or as a matter of opinion.

(3)In this Part references to filing a document with the court are, in relation to a court in Scotland, references to lodging it in court.

(4)The Secretary of State may by regulations amend this section for the purposes of changing the definition of “qualified person” in subsection (1).

(5)Regulations under subsection (4) are subject to the affirmative resolution procedure.

RegulationsU.K.

A55RegulationsU.K.

(1)Regulations under this Part may make—

(a)different provision for different purposes;

(b)consequential, supplementary, incidental or transitional provision or savings.

(2)Regulations under this Part are to be made by statutory instrument, unless they are made by the Scottish Ministers.

(3)Where regulations of the Secretary of State under this Part are subject to “the affirmative resolution procedure”, they may not be made unless a draft of the statutory instrument containing them has been laid before Parliament and approved by a resolution of each House of Parliament.]

Part IE+W+S Company Voluntary Arrangements

Modifications etc. (not altering text)

C72Pt. 1 (ss. 1-7), Pt. 2 (ss. 8-27) modified by Company Directors Disqualification Act 1986 (c. 46, SIF 27), ss. 21(2), 25

C73Pts. 1-7 (ss. 1-251) applied (with modifications) by S.I. 1989/1276, arts. 2, 3

Pt. 1 (ss. 1-7) applied with modifications by S.I. 1986/2142, arts. 1(2), 11, 13(3), 15

Pt. 1 (ss. 1-7) applied (with modifications) (1.12.1997) by 1986 c. 53, Sch. 15A (as inserted by 1997 c. 32, s. 39(2), Sch. 6 para. 1(2)(a); S.I. 1997/2668, art. 2, Sch. Pt. 1(i)) (as amended (13.3.2018) by The Small Business, Enterprise and Employment Act 2015 (Consequential Amendments, Savings and Transitional Provisions) Regulations 2018 (S.I. 2018/208), regs. 1(3), 2(3))

C74Pt. 1: power to apply or incorporate conferred (6.4.2001) by 2000 c. 12, s. 14; S.I. 2000/3316, art. 2

Pt. 1: power to apply (with modifications) conferred (15.9.2003) by 2002 c. 40, ss. 255(2)(a), 279 (with s. 249(6)); S.I. 2003/2093, art. 2(1), Sch. 1 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))

Pt. 1: power to apply (with modifications) conferred (20.11.2003 for specified purposes and 1.4.2004 otherwise) by Health and Social Care (Community Health and Standards) Act 2003 (c. 43), ss. 24(2), 26, 199; S.I. 2004/759, art. 2

Pt. 1: power to apply (with modifications) conferred (E.W.) (1.3.2007) by National Health Service Act 2006 (c. 41), ss. 53(2), 55, 277

C77Pt. 1 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), s. 113(6)-(9) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch.

C78Pt. 1 applied (with modifications) (21.2.2009) by Banking Act 2009 (c. 1), ss. 103, 134, 263(1) (with s. 247); S.I. 2009/296, art. 3, Sch. para. 2

C81Pt. 1 power to apply (with or without modifications) (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 118(1)(2), 154 (with Sch. 5)

C82Pts. 1-4 applied (with modifications) (E.W.S.) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), reg. 2, Sch. 1 para. 3 (with reg. 5)

The ProposalE+W+S

1 Those who may propose an arrangement.E+W+S

(1)The directors of a company [F2(other than one which is in administration or 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 (from here on 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 F3[F4... in relation to the voluntary arrangement].

(3)Such a proposal may also be made—

[F5(a)where the company is in administration, by the administrator,]

(b)where the company is being wound up, by the liquidator.

[F6(4)In this Part “company” means—

[F7(a)a company registered under the Companies Act 2006 in England and Wales or Scotland;]

(b)a company incorporated in an EEA State F8...; or

(c)a company not incorporated in an EEA State but having its centre of main interests in a member State [F9(other than Denmark) or in the United Kingdom].

(5)In subsection (4), in relation to a company, “centre of main interests” has the same meaning as in the [F10Article 3 of the EU Regulation].

(6)If a company incorporated outside the United Kingdom has a principal place of business in Northern Ireland, no proposal under this Part shall be made in relation to it unless it also has a principal place of business in England and Wales or Scotland (or both in England and Wales or Scotland).]

Textual Amendments

F2Words in s. 1(1) substituted (15.9.2003) by 2002 c. 40, ss. 248(3), 279, Sch. 17 para. 10(a) (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))

F4Words in s. 1(2) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 2; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F5S. 1(3)(a) substituted (15.9.2003) by 2002 c. 40, ss. 248(3), 279, Sch. 17 para. 10(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))

F6S. 1(4)-(6) substituted (13.4.2005) for s. 1(4) by The Insolvency Act 1986 (Amendment) Regulations 2005 (S.I. 2005/879), reg. 2(2) (with reg. 3)

F7S. 1(4)(a) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 71(2)} (with art. 10, Sch. 1 para. 84)

Modifications etc. (not altering text)

F111A Moratorium.E+W+S

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

2 Procedure where nominee is not the liquidator or administrator.E+W+S

(1)This section applies where the nominee under section 1 is not the liquidator or administrator of the company F12....

(2)The nominee shall, within 28 days (or such longer period as the court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the court stating—

(a)[F13whether, in his opinion, the proposed voluntary arrangement has a reasonable prospect of being approved and implemented,]

[F14(b)whether, in his opinion, the proposal should be considered by a meeting of the company and by the company's creditors, and

(c)if in his opinion it should, the date on which, and time and place at which, he proposes a meeting of the company 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.

[F15(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 F16... in relation to the voluntary arrangement.]

Textual Amendments

F12Words in s. 2(1) omitted (26.6.2020) by virtue of Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 3 (with ss. 2(2), 5(2))

F13Words in s. 2(2) inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 3(a); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F14S. 2(2)(b)(c) substituted for s. 2(2)(aa)(b) (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 2; S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F15S. 2(4) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 3(b); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

Modifications etc. (not altering text)

3[F17Consideration of proposal].E+W+S

(1)Where the nominee under section 1 is not the liquidator or administrator, and it has been report to the court [F18under section 2(2) that the proposal should be considered by a meeting of the company and by the company's creditors], the person making the report shall (unless the court otherwise [F19directs)—

(a)summon a meeting of the company to consider the proposal for the time, date and place proposed in the report, and

(b)seek a decision from the company's creditors as to whether they approve the proposal.]

(2)Where the nominee is the liquidator or administrator, he [F20shall—

(a)summon a meeting of the company to consider the proposal for such time, date and place as he thinks fit, and

(b)seek a decision from the company's creditors as to whether they approve the proposal.]

[F21(3)A decision of the company's creditors as to whether they approve the proposal is to be made by a qualifying decision procedure.

(4)Notice of the qualifying decision procedure must be given to every creditor of the company of whose claim and address the person seeking the decision is aware.]

Textual Amendments

F17S. 3 heading substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 3(5); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F18Words in s. 3(1) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 3(2)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F19Words in s. 3(1) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 3(2)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F20Words in s. 3(2) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 3(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F21S. 3(3)(4) substituted for s. 3(3) (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 3(4); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications etc. (not altering text)

Consideration and implementation of proposalE+W+S

4 Decisions of [F22the company and its creditors].E+W+S

[F23(1)This section applies where, under section 3—

(a)a meeting of the company is summoned to consider the proposed voluntary arrangement, and

(b)the company's creditors are asked to decide whether to approve the proposed voluntary arrangement.

(1A)The company and its creditors may 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 F24... [F25in relation to the voluntary arrangement].

But they shall not include any modification by virtue of which the proposal ceases to be a proposal such as is mentioned in section 1.

(3)[F26Neither the company nor its creditors may] 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)Subject as follows, [F27neither the company nor its creditors may] 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, F28...

[F29(aa)any ordinary preferential debt of the company is to be paid otherwise than in priority to any secondary preferential debts that it may have,]

(b)a preferential creditor of the company is to be paid an amount in respect of [F30an ordinary preferential debt] that bears to that debt a smaller proportion than is borne to [F31another ordinary] preferential debt by the amount that is to be paid in respect of that other debt [F32, F33...

(c)a preferential creditor of the company is to be paid an amount in respect of a secondary preferential debt that bears to that debt a smaller proportion than is borne to another secondary preferential debt by the amount that is to be paid in respect of that other debt.] [F34or

(d)in the case of a company which is a relevant financial institution (see section 387A), any non-preferential debt is to be paid otherwise than in accordance with the rules in section 176AZA(2) or (3).]

However, F35... such a proposal or modification [F36may be approved] with the concurrence of the F37... creditor concerned.

[F38(4A)Subject to subsection (4B), where the nominee’s report under section 2(2) is submitted to the court before the end of the period of 12 weeks beginning with the day after the end of any moratorium for the company under Part A1, neither the company nor its creditors may approve any proposal or modification under which the following are to be paid otherwise than in full—

(a)moratorium debts (within the meaning given by section 174A);

(b)priority pre-moratorium debts (within the meaning given by section 174A).

(4B)Subsection (4A) does not prevent the approval of such a proposal or modification with the concurrence of the creditor concerned.]

(5)Subject as above, [F39the meeting of the company and the qualifying decision procedure] shall be conducted in accordance with the rules.

(6)After the conclusion of [F40the company] 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.

[F41(6A)After the company's creditors have decided whether to approve the proposed voluntary arrangement the person who sought the decision must—

(a)report the creditors' decision to the court, and

(b)immediately after reporting to the court, give notice of the creditors' decision to such persons as may be prescribed.]

(7)References in this section to preferential debts [F42, ordinary preferential debts, secondary preferential debts] and preferential creditors are to be read in accordance with section 386 in Part XII of this Act.

Textual Amendments

F22Words in s. 4 heading substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(8); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F23S. 4(1)(1A) substituted for s. 4(1) (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(2); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F25Words in s. 4(2) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 4; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F26Words in s. 4(3) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F27Words in s. 4(4) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(4)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F35Words in s. 4(4) omitted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by virtue of Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(4)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F36Words in s. 4(4) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(4)(c); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F39Words in s. 4(5) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(5); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F40Words in s. 4(6) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(6); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F41S. 4(6A) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 4(7); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications etc. (not altering text)

C89S. 4 modified (28.12.2020 until IP completion day when the amending provision ceases to have effect in accordance with reg. 1(4) of the amending S.I.) by The Bank Recovery and Resolution (Amendment) (EU Exit) Regulations 2020 (S.I. 2020/1350), regs. 1(4), 110 (with reg. 108)

[F434A Approval of arrangement.E+W+S

(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 [F44the meeting of the company summoned under section 3 and by the company's creditors pursuant to that section], or

(b)(subject to any order made under subsection [F45(6)]) it has been taken by the [F46company's creditors pursuant to] that section.

(3)If the decision taken by the [F47company's creditors] 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 [F48company's creditors], 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, [F49as defined by section A49(13)], applies to the court under subsection (3), the [F50appropriate regulator] is entitled to be heard on the application.

[F51(5A)The appropriate regulator” means—

(a)where the regulated company is a PRA-regulated company [F52as defined by section A49(13)], the Financial Conduct Authority and the Prudential Regulation Authority, and

(b)in any other case, the Financial Conduct Authority.]

(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 [F53company's creditors], or

(b)make such other order as it thinks fit.]

Textual Amendments

F43S. 4A inserted (1.1.2003) by 2000 c. 39, ss. 2, 16(1), Sch. 2 Pt. I para. 5; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F44Words in s. 4A(2)(a) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 5(2)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F46Words in s. 4A(2)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 5(2)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F47Words in s. 4A(3) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 5(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F48Words in s. 4A(4)(a) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 5(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F53Words in s. 4A(6)(a) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 5(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications etc. (not altering text)

C90S. 4A(2) modified (1.1.2003) by 1986 c. 53, Sch. 15A para. 8A (as inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. II para. 14(3)); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

5 Effect of approval.E+W+S

[F54(1)This section applies where a decision approving a voluntary arrangement has effect under section 4A.]

(2)The F55... voluntary arrangement—

(a)takes effect as if made by the company at the [F56time the creditors decided to approve the voluntary arrangement], and

[F57(b)binds every person who in accordance with the rules—

(i)was entitled to vote [F58in 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 [F59is 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 [F59provide 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 F55... voluntary arrangement.

[F60(3A)Where immediately before the voluntary arrangement took effect a moratorium for the company was in force under Part A1 and a petition for the winding up of the company, other than an excepted petition within the meaning of section A20, was presented before the beginning of the moratorium, the court must dismiss the petition.]

(4)The court shall not make an order under subsection (3)(a) [F61or dismiss a petition under subsection (3A)]

(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) [F62and (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.

[F63(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.]

Textual Amendments

F54S. 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)

F55Words 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)

F56Words in s. 5(2)(a) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 6(2)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F57S. 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)

F58Words in s. 5(2)(b)(i) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 6(2)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F59Words 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))

F62Words in s. 5(4)(a) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 6(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications etc. (not altering text)

C91S. 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)

C93S. 5 modified by S.I. 2012/3013, Sch. 2 para. 36 (as inserted (4.7.2018) by The Insolvency of Registered Providers of Social Housing Regulations 2018 (S.I. 2018/728), regs. 1, 3(6), Sch. 2)

C95S. 5 restricted by 2010 asp17, s. 103 (as substituted (8.3.2019) by Housing (Amendment) (Scotland) Act 2018 (asp 13), ss. 6(11), 11(2); S.S.I. 2018/253, reg. 2(2))

6 Challenge of decisions.E+W+S

(1)Subject to this section, an application to the court may be made, by any of the persons specified below, on one or both of the following grounds, namely—

(a)that a voluntary arrangement [F64which has effect under section 4A] 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 [F65the meeting of the company, or in relation to the relevant qualifying decision procedure].

[F66(1A)In this section—

(a)the “relevant qualifying decision procedure” means the qualifying decision procedure in which the company's creditors decide whether to approve a voluntary arrangement;

(b)references to a decision made in the relevant qualifying decision procedure include any other decision made in that qualifying decision procedure.]

(2)The persons who may apply under [F67subsection (1)] are—

(a)a person entitled, in accordance with the rules, to vote at [F68the meeting of the company or in the relevant qualifying decision procedure];

[F69(aa)a person who would have been entitled, in accordance with the rules, to vote [F70in the relevant qualifying decision procedure] if he had had notice of it;]

(b)the nominee or any person who has replaced him under section 2(4) or 4(2); and

(c)if the company is being wound up or [F71is in administration], the liquidator or administrator.

[F72(2A)Subject to this section, where a voluntary arrangement in relation to a company in energy administration is approved at the meetings summoned under section 3, an application to the court may be made—

(a)by the Secretary of State, or

(b)with the consent of the Secretary of State, by the Gas and Electricity Markets Authority,

on the ground that the voluntary arrangement is not consistent with the achievement of the objective of the energy administration.]

(3)An application under this section shall not be made

[F73(a)]after the end of the period of 28 days beginning with the first day on which each of the reports required by section 4(6) [F74and (6A)] has been made to the court [F75or

(b)in the case of a person who was not given notice of the [F76relevant qualifying decision procedure], after the end of the period of 28 days beginning with the day on which he became aware that [F77the relevant qualifying decision procedure] 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.]

(4)Where on such an application the court is satisfied as to either of the grounds mentioned in subsection (1) [F78or, in the case of an application under subsection (2A), as to the ground mentioned in that subsection], it may do [F79any] of the following, namely—

(a)revoke or suspend [F80any decision approving the voluntary arrangement which has effect under section 4A] or, in a case falling within subsection (1)(b), any [F81decision taken by the meeting [F82of the company, or in the relevant qualifying decision procedure,] which has effect under that section];

(b)give a direction to any person for the summoning of [F83a further company meeting] to consider any revised proposal the person who made the original proposal may make or, in the case falling within subsection (1)(b), [F84and relating to the company meeting, a further company] meeting to reconsider the original proposal;

[F85(c)direct any person—

(i)to seek a decision from the company's creditors (using a qualifying decision procedure) as to whether they approve any revised proposal the person who made the original proposal may make, or

(ii)in a case falling within subsection (1)(b) and relating to the relevant qualifying decision procedure, to seek a decision from the company's creditors (using a qualifying decision procedure) as to whether they approve the original proposal.]

(5)Where at any time after giving a direction under subsection (4)(b) [F86or (c) in relation to] a revised proposal the 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 [F87decision approving the voluntary arrangement which has effect under section 4A].

(6)In a case where the court, on an application under this section with respect to any meeting [F88or relevant qualifying decision procedure]

(a)gives a direction under subsection (4)(b) [F89or (c)], or

(b)revokes or suspends an approval under subsection (4)(a) or (5),

the court may give such supplemental directions as it thinks fit and, in particular, directions with respect to things done [F90under the voluntary arrangement since it took effect].

(7)Except in pursuance of the preceding provisions of this section,

[F91(a)][F92a decision taken] at a [F93company] meeting summoned under section 3 is not invalidated by any irregularity at or in relation to the meeting [F94, and

(b)a decision of the company's creditors made in the relevant qualifying decision procedure is not invalidated by any irregularity in relation to the relevant qualifying decision procedure.]

[F95(8)In this section “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.]

Textual Amendments

F64Words in s. 6(1)(a) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(2); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F65Words in s. 6(1)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(2); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F66S. 6(1A) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(3); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F68Words in s. 6(2)(a) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(4)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F69S. 6(2)(aa) inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(3); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F70Words in s. 6(2)(aa) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(4)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F71Words in s. 6(2)(c) substituted (15.9.2003) by 2002 c. 40, ss. 248(3), 279, Sch. 17 para. 12 (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))

F73In s. 6(3) “(a)" inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(4)(a); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F74Words in s. 6(3)(a) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(5); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F75S. 6(3)(b) and words inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(4)(b); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F76Words in s. 6(3)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(6)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F77Words in s. 6(3)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(6)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F79Word in s. 6(4) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(7); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F80Words in s. 6(4)(a) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(5)(a); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F81Words in s. 6(4)(a) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(5)(b); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F82Words in s. 6(4)(a) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(8); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F83Words in s. 6(4)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(9)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F84Words in s. 6(4)(b) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(9)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F85S. 6(4)(c) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(10); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F86Words in s. 6(5) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(11); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F87Words in s. 6(5) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(6); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F88Words in s. 6(6) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(12)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F89Words in s. 6(6)(a) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(12)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F90Words in s. 6(6) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(7); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F91S. 6(7)(a): words in s. 6(7) renumbered as s. 6(7)(a) (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(13)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F92Words in s. 6(7) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 7(8); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F93Word in s. 6(7)(a) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(13)(b); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F94S. 6(7)(b) and word inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 7(13)(c); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications etc. (not altering text)

C96S. 6 amended (1.12.2001) by 2000 c. 8, s. 356(2); S.I. 2001/3538, art. 2(1)

S. 6 amended (1.1.2003) by 2000 c. 8, s. 356(1) (as substituted (1.1.2003) by 2000 c. 39, s. 15(3)); S.I. 2002/2711, art 2 (subject to transitional provisions in arts. 3-5)

C98S. 6 modified by S.I. 2012/3013, Sch. 2 para. 37 (as inserted (4.7.2018) by The Insolvency of Registered Providers of Social Housing Regulations 2018 (S.I. 2018/728), regs. 1, 3(6), Sch. 2)

[F966A False representations, etc.E+W+S

(1)If, for the purpose of obtaining the approval of the members or creditors of a company to a proposal for a voluntary arrangement, a person who is an officer of the company—

(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.]

Textual Amendments

F96S. 6A inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 8; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

7 Implementation of proposal.E+W+S

(1)This section applies where a voluntary arrangement [F97has effect under section 4A].

(2)The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred—

[F98(a)on the nominee by virtue of the approval [F99of the voluntary arrangement by the company or its creditors (or both) pursuant to] section 3],

(b)by virtue of section 2(4) or 4(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; 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 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.

(5)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 F100... [F101in relation to the voluntary arrangement], either in substitution for the existing supervisor or to fill a vacancy.

(6)The power conferred by subsection (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.

Textual Amendments

F97Words in s. 7(1) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 9(a); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F98S. 7(2)(a) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 9(b); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F99Words in s. 7(2)(a) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 8; S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F101Words in s. 7(5) substituted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 9(c); S.I. 2002/2711, art. 2, (subject to transitional provisions in arts. 3-5)

Modifications etc. (not altering text)

C100S. 7 amended (1.1.2003) by 2000 c. 8, s. 356(1) (as substituted (1.1.2003) by 2000 c. 39, s. 15(3)); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

[F1027A Prosecution of delinquent officers of company.E+W+S

[F103(1)This section applies where the approval of a voluntary arrangement in relation to a company has taken effect under section 4A.]

(2)[F104If it appears to the supervisor that any past or present officer of the company has committed an offence in connection with the voluntary arrangement, the supervisor must 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 F105... supervisor and relating to the matter in question) as the authority requires.

  • In this subsection, “the appropriate authority” means—

    (i)

    in the case of a company registered in England and Wales, the Secretary of State, and

    (ii)

    in the case of a company registered in Scotland, the Lord Advocate.

(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 [F106the Companies Act 1985] to investigate a company’s affairs.

(4)For the purpose of such an investigation any obligation imposed on a person by any provision of the [F107the Companies Acts] 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 M1Perjury 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 M2Criminal Law (Consolidation) (Scotland) Act 1995 (false statements made on oath or otherwise than on oath).

(8)Where a prosecuting authority institutes criminal proceedings following any report under subsection (2), the F108... 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.]

Textual Amendments

F102Ss. 7A, 7B inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 10; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F105Words in s. 7A(2)(b) omitted (26.6.2020) by virtue of Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 7(3)(b) (with ss. 2(2), 5(2))

F106Words in s. 7A(3) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 71(3)(a)} (with art. 10, Sch. 1 para. 84)

F107Words in s. 7A(4) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 71(3)(b)} (with art. 10, Sch. 1 para. 84)

F108Words in s. 7A(8) omitted (26.6.2020) by virtue of Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 7(4) (with ss. 2(2), 5(2))

Modifications etc. (not altering text)

C102S. 7A modified (1.1.2003) by 1986 c. 53, Sch. 15A para 9A (as inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. II para. 14(4)); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

C103S. 7A(2) amended (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. II para. 13(1); S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

Marginal Citations

F1097B Arrangements coming to an end prematurely.E+W+S

For the purposes of this Part, a voluntary arrangement the approval of which has taken effect under section 4A F110... 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) F111....

Textual Amendments

F109Ss. 7A, 7B inserted (1.1.2003) by 2000 c. 39, s. 2, Sch. 2 Pt. I para. 10; S.I. 2002/2711, art. 2 (subject to transitional provisions in arts. 3-5)

F110Words in s. 7B omitted (26.6.2020) by virtue of Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 8(a) (with ss. 2(2), 5(2))

F111Words in s. 7B omitted (26.6.2020) by virtue of Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 8(b) (with ss. 2(2), 5(2))

[F112Part IIE+W+SAdministration

Textual Amendments

F112Pt. 2 (s. 8) substituted (15.9.2003) for Pt. 2 (ss. 8-27) by Enterprise Act 2002 (c. 40), ss. 248(1), 279 (with savings for special administration regimes in s. 249(1)-(3)(6) and further savings in S.I. 2003/2093, art. 3); S.I. 2003/2093, art. 2(1), Sch. 1 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2)).

Pt. 2 as saved by 2002 c. 40, s. 249 or S.I. 2003/2093, art. 3 modified by Water Industry Act 1991 (c. 56), Sch. 3 (as amended (26.5.2015) by Deregulation Act 2015 (c. 20), s. 115(3)(r), Sch. 23 para. 28(4)(e)); modified (1.4.1994) by Railways Act 1993 c. 43, ss. 59-62, 150(1)(c), Sch. 6 and S.I. 1994/571, art. 5 (with a transitional provision in art. 7); applied (with modifications) (1.12.1997) by Building Societies Act 1986 (c. 53), Sch. 15A (as inserted by 1997 c. 32, s. 39(2), Sch. 6 para. 1(2)(a) and S.I. 1997/2668, art. 2, Sch. Pt. I(i)); modified (1.2.2001) by Transport Act 2000 (c. 38), ss. 27-30, Sch. 1; modified (15.7.2003) by Greater London Authority Act 1999 (c. 29), ss. 220-223, 425(2), Sch. 14 (with Sch. 12 para. 9(1)) and S.I. 2003/1920, art. 2; excluded (26.12.2003) by S.I. 2003/3226, reg. 8(3)(4); applied (with modifications) and modified in part (28.11.2005) by S.I. 2005/3050, regs. 4, 14, 20, Sch. 3 paras. 1(a), 2 (with Sch. 4); applied and amended in part (30.11.2007) by S.I. 2007/3141, rules 3, 13(4), 18(1); amended (6.4.2008) by S.I. 2008/948, art. 3(1), Sch. 1 para. 101 (with arts. 6, 11 and 12); amended in part (1.10.2009) by S.I. 2009/1941, arts. 2(1), 8, Sch. 1 para. 73(1)(2)(a)(b)(3) (with Sch. 1 para. 84); amended (1.10.2009) by S.I. 2009/1972, reg. 7(a); modified in part (26.5.2015) by Deregulation Act 2015 (c. 20), s. 115(3)(n), Sch. 6 para. 25; amended (31.12.2020) by S.I. 2019/146, reg. 1(3), Sch. para. 45(2) (with regs. 4, 5); 2020 c. 1, Sch. 5 para. 1(1)

Modifications etc. (not altering text)

C107Pt. 2: power to apply or incorporate conferred (6.4.2001) by Limited Liability Partnerships Act 2000 (c. 12), s. 14; S.I. 2000/3316, art. 2

Pt. 2: power to apply (with modifications) conferred (20.7.2001) by Financial Services and Markets Act 2000 (c. 8), s. 360; S.I. 2001/2632, art. 2(1), Sch. Pt. I

Pt. 2: power to apply (with modifications) conferred (15.9.2003) by Enterprise Act 2002 (c. 40), ss. 255(2)(b), 279 (with s. 249(6)); S.I. 2003/2093, art. 2(1), Sch. 1 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))

8 AdministrationE+W+S

Schedule B1 to this Act (which makes provision about the administration of companies) shall have effect.]

F112Part IIE+W+S Administration Orders

Making etc. of administration orderE+W+S

9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

11 Effect of order.E+W+S

Textual Amendments

F116S. 11(3)(ba) inserted (2.4.2001) by 2000 c. 39, s. 9(3); S.I. 2001/766, art. 2(1)(b) (subject to transitional provisions in art. 3)

Modifications etc. (not altering text)

C125S. 11 applied (with modifications) by Water Act 1989 (c. 15, SIF 130), s. 23, Sch. 6 Pt. I para. 1 (with ss. 58(7), 101(1), 141(6), 160(1)(2)(4), 163, 189(4)?(10), 190, 193(1), Sch. 26 paras. 3(1)(2), 17, 40(4), 57(6), 58)

Ss. 11-23, 27 applied (with modifications) (1.2.2001) by 2000 c. 38, s. 30, Sch. 1 Pt. I para. 2; S.I. 2001/57, art. 3(1), Sch. 2 Pt. I (subject to transitional provision and saving in art. 3(1), Sch. 2 Pt. II)

C126Ss. 11-15 modified (E.W) (1.12.1991) by Water Industry Act 1991 (c. 56), ss. 23(3), 223(2), Sch. 3 Pts. I, II paras. 1, 12(2) (with ss. 82(3), 186(1), 222(1), Sch. 14 para. 6)

Ss. 11-23 modified (1.4.1994) by 1993 c. 43, ss. 59(3), 150(1)(c), Sch. 6 Pt. I para. 1; S.I. 1994/571, art. 5 (with transitional provision in art. 7)

Ss. 11-23 modified (1.4.1994) by 1993 c. 43, ss. 59(3), 150(1)(c), Sch. 6 Pt. II para. 12(1); S.I. 1994/571, art. 5 (with transitional provision in art. 7)

Ss. 11-23, 27 modified (1.2.2001) by 2000 c. 38, s. 215, Sch. 16 para 2; S.I. 2001/57, art. 3(1), Sch. 2 Pt. I (with transitional provision and saving in art. 3(1), Sch. 2 Pt. II)

Ss. 11-23, 27 modified (15.7.2003) by 1999 c. 29, ss. 220(3), 425(2), Sch. 14 paras. 1-11, 12-19 (with Sch. 12 para. 9(1)); S.I. 2003/1920, art. 2(b)

C127S. 11(2) excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 175(1), 182(4), Sch. 22 para. 11(2); S.I. 1991/878, art. 2, Sch.

S. 11(2) excluded (15.8.1995) by S.I. 1995/2049, reg. 21(2)(3)

S. 11(2) excluded (11.12.1999) by S.I. 1999/2979, reg. 19(1)

C130S. 11(3)(c) excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 175(1)(a), 182(4), Sch. 22 para. 11(1); S.I. 1991/878, art. 2, Sch.

S. 11(3)(c) excluded (15.8.1995) by S.I. 1995/2049, reg. 21(2)(3)

S. 11(3)(c) excluded (11.12.1999) by S.I. 1999/2979, reg. 19(1)(a)

12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

AdministratorsE+W+S

13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

20. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Ascertainment and investigation of company’s affairsE+W+S

21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Administrator’s proposalsE+W+S

23. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

MiscellaneousE+W+S

26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IIIE+W+S Receivership

Modifications etc. (not altering text)

C173Pts. 1-7 (ss. 1-251) applied (with modifications) by S.I. 1989/1276, arts. 2, 3

Pt. 3 applied (with modifications) (4.4.2006) by The Cross-Border Insolvency Regulations 2006 (S.I. 2006/1030), reg. 3

C174Pt. 3 (ss. 28-72) extended by S.I. 1989/638, regs. 19(1), 21

C176Pt. 3: power to apply or incorporate conferred (6.4.2001) by 2000 c. 12, s. 14; S.I. 2000/3316, art. 2

Chapter IE+W+S Receivers and Managers (England and Wales)

Modifications etc. (not altering text)

C179Pt. III Chapter 1 (ss. 28-49) applied (with modifications) (1.12.1997) by 1986 c. 53, Sch. 15A (as inserted by 1997 c. 32, s. 39(2), Sch. 6 para. 1(2)(a); S.I. 1997/2668, art. 2, Sch. Pt. I(i))

Preliminary and general provisionsE+W+S

[F12328 Extent of this Chapter.E+W+S

(1)In this Chapter “company” means a company registered under the Companies Act 2006 in England and Wales or Scotland.

(2)This Chapter does not apply to receivers appointed under Chapter 2 of this Part (Scotland).]

Textual Amendments

F123S. 28 substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 74(2)} (with art. 10, Sch. 1 para. 84)

29 Definitions.E+W+S

(1)It is hereby declared that, except where the context otherwise requires—

(a)any reference in F124. . . this Act to a receiver or manager of the property of a company, or to a receiver of it, includes a receiver or manager, or (as the case may be) a receiver of part only of that property and a receiver only of the income arising from the property or from part of it; and

(b)any reference in F124. . . this Act to the appointment of a receiver or manager under powers contained in an instrument includes an appointment made under powers which, by virtue of any enactment, are implied in and have effect as if contained in an instrument.

(2)In this Chapter “administrative receiver” means—

(a)a receiver or manager of the whole (or substantially the whole) of a company’s property appointed by or on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge, or by such a charge and one or more other securities; or

(b)a person who would be such a receiver or manager but for the appointment of some other person as the receiver of part of the company’s property.

Textual Amendments

F124Words in s. 29(1)(a)(b) omitted (1.10.2009) by virtue of The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 74(3)} (with art. 10, Sch. 1 para. 84)

30 Disqualification of body corporate from acting as receiver.E+W+S

A body corporate is not qualified for appointment as receiver of the property of a company, and any body corporate which acts as such a receiver is liable to a fine.

[F12631 Disqualification of bankrupt [F125 or person in respect of whom a debt relief order is made] E+W+S

(1)A person commits an offence if he acts as receiver or manager of the property of a company on behalf of debenture holders while—

(a)he is an undischarged bankrupt,

[F127(aa)a moratorium period under a debt relief order applies in relation to him,] or

(b)a bankruptcy restrictions order [F128or a debt relief restrictions order] is in force in respect of him.

(2)A person guilty of an offence under subsection (1) shall be liable to imprisonment, a fine or both.

(3)This section does not apply to a receiver or manager acting under an appointment made by the court.]

Textual Amendments

F125S. 31: words in heading inserted (24.2.2009 for certain purposes otherwise 6.4.2009) by Tribunals, Courts and Enforcement Act 2007 (c. 15), ss. 108(3), 148(5), Sch. 20 para. 2(2); S.I. 2009/382, art. 2

F126S. 31 substituted (1.4.2004) by 2002 c. 40, ss. 257(3), 278, Sch. 21 para. 1 (with s. 249(6)); S.I. 2003/2093, art. 2(2), Sch. 2 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))

F127S. 31(1)(aa) inserted (24.2.2009 for certain purposes otherwise 6.4.2009) by Tribunals, Courts and Enforcement Act 2007 (c. 15), ss. 108(3), 148(5), Sch. 20 para. 2(1)(a); S.I. 2009/382, art. 2

F128Words in s. 31(1)(b) inserted (24.2.2009 for certain purposes otherwise 6.4.2009) by Tribunals, Courts and Enforcement Act 2007 (c. 15), ss. 108(3), 148(5), Sch. 20 para. 2(1)(b); S.I. 2009/382, art. 2

32 Power for court to appoint official receiver.E+W+S

Where application is made to the court to appoint a receiver on behalf of the debenture holders or other creditors of a company which is being wound up by the court, the official receiver may be appointed.

Receivers and managers appointed out of courtE+W+S

33 Time from which appointment is effective.E+W+S

(1)The appointment of a person as a receiver or manager of a company’s property under powers contained in an instrument—

(a)is of no effect unless it is accepted by that person before the end of the business day next following that on which the instrument of appointment is received by him or on his behalf, and

(b)subject to this, is deemed to be made at the time at which the instrument of appointment is so received.

(2)This section applies to the appointment of two or more persons as joint receivers or managers of a company’s property under powers contained in an instrument, subject to such modifications as may be prescribed by the rules.

34 Liability for invalid appointment.E+W+S

Where the appointment of a person as the receiver or manager of a company’s property under powers contained in an instrument is discovered to be invalid (whether by virtue of the invalidity of the instrument or otherwise), the court may order the person by whom or on whose behalf the appointment was made to indemnify the person appointed against any liability which arises solely by reason of the invalidity of the appointment.

35 Application to court for directions.E+W+S

(1)A receiver or manager of the property of a company appointed under powers contained in an instrument, or the persons by whom or on whose behalf a receiver or manager has been so appointed, may apply to the court for directions in relation to any particular matter arising in connection with the performance of the functions of the receiver or manager.

(2)On such an application, the court may give such directions, or may make such order declaring the rights of persons before the court or otherwise, as it thinks just.

Modifications etc. (not altering text)

C180S. 35 amended (1.12.2001) by 2000 c. 8, s. 363(2); S.I. 2001/3538, art. 2(1)

36 Court’s power to fix remuneration.E+W+S

(1)The court may, on an application made by the liquidator of a company, by order fix the amount to be paid by way of remuneration to a person who, under powers contained in an instrument, has been appointed receiver or manager of the company’s property.

(2)The court’s power under subsection (1), where no previous order has been made with respect thereto under the subsection—

(a)extends to fixing the remuneration for any period before the making of the order or the application for it,

(b)is exercisable notwithstanding that the receiver or manager has died or ceased to act before the making of the order or the application, and

(c)where the receiver or manager has been paid or has retained for his remuneration for any period before the making of the order any amount in excess of that so fixed for that period, extends to requiring him or his personal representatives to account for the excess or such part of it as may be specified in the order.

But the power conferred by pararaph (c) shall not be exercised as respects any period before the making of the application for the order under this section, unless in the court’s opinion there are special circumstances making it proper for the power to be exercised.

(3)The court may from time to time on an application made either by the liquidator or by the receiver or manager, vary or amend an order made under subsection (1).

37 Liability for contracts, etc.E+W+S

(1)A receiver or manager appointed under powers contained in an instrument (other than an administrative receiver) is, to the same extent as if he had been appointed by order of the court—

(a)personally liable on any contract entered into by him in the performance of his functions (except in so far as the contract otherwise provides) and on any contract of employment adopted by him in the performance of those functions, and

(b)entitled in respect of that liability to indemnity out of the assets.

(2)For the purposes of subsection (1)(a), the receiver or manager is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done with 14 days after his appointment.

(3)Subsection (1) does not limit any right to indemnity which the receiver or manager would have apart from it, nor limit his liability on contracts entered into without authority, nor confer any right to indemnity in respect of that liability.

(4)Where at any time the receiver or manager so appointed vacates office—

(a)his remuneration and any expenses properly incurred by him, and

(b)any indemnity to which he is entitled out of the assets of the company,

shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any charge or other security held by the person by or on whose behalf he was appointed.

38 Receivership accounts to be delivered to registrar.E+W+S

(1)Except in the case of an adminstrative receiver, every receiver or manager of a company’s property who has been appointed under powers contained in an instrument shall deliver to the registrar of companies for registration the requisite accounts of his receipts and payments.

(2)The accounts shall be delivered within one month (or such longer period as the registrar may allow) after the expiration of 12 months from the date of his appointment and of every subsequent period of 6 months, and also within one month after he ceases to act as receiver or manager.

(3)The requisite accounts shall be an abstract in the prescribed form showing—

(a)receipts and payments during the relevant period of 12 or 6 months, or

(b)where the receiver or manager ceases to act, receipts and payments during the period from the end of the period of 12 or 6 months to which the last preceding abstract related (or, if no preceding abstract has been delivered under this section, from the date of his appointment) up to the date of his so ceasing, and the aggregate amount of receipts and payments during all preceding periods since his appointment.

(4)In this section “prescribed” means prescribed by regulations made by statutory instrument by the Secretary of State.

(5)A receiver or manager who makes default in complying with this section is liable to a fine and, for continued contravention, to a daily default fine.

Provisions applicable to every receivershipE+W+S

39 Notification that receiver or manager appointed.E+W+S

[F129(1)Where a receiver or manager of the property of a company has been appointed—

(a)every invoice, order for goods or services, business letter or order form (whether in hard copy, electronic or any other form) issued by or on behalf of the company or the receiver or manager or the liquidator of the company; and

(b)all the company's websites,

must contain a statement that a receiver or manager has been appointed.]

(2)If default is made in complying with this section, the company and any of the following persons, who knowingly and wilfully authorises or permits the default, namely, any officer of the company, any liquidator of the company and any receiver or manager, is liable to a fine.

40 Payment of debts out of assets subject to floating charge.E+W+S

(1)The following applies in the case of a company, where a receiver is appointed on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge.

(2)If the company is not at the time in course of being wound up, its preferential debts (within the meaning given to that expression by section 386 in Part XII) shall be paid out of the assets coming to the hands of the receiver in priority to any claims for principal or interest in respect of the debentures.

(3)Payments made under this section shall be recouped, as far as may be, out of the assets of the company available for payment of general creditors.

41 Enforcement of duty to make returns.E+W+S

(1)If a receiver or manager of a company’s property—

(a)having made default in filing, delivering or making any return, account or other document, or in giving any notice, which a receiver or manager is by law required to file, deliver, make or give, fails to make good the default within 14 days after the service on him of a notice requiring him to do so, or

(b)having been appointed under powers contained in an instrument, has, after being required at any time by the liquidator of the company to do so, failed to render proper accounts of his receipts and payments and to vouch them and pay over to the liquidator the amount properly payable to him,

the court may, on an application made for the purpose, make an order directing the receiver or manager (as the case may be) to make good the default within such time as may be specified in the order.

(2)In the case of the default mentioned in subsection (1)(a), application to the court may be made by any member or creditor of the company or by the registrar of companies; and in the case of the default mentioned in subsection (1)(b), the application shall be made by the liquidator.

In either case the court’s order may provide that all costs of and incidental to the application shall be borne by the receiver or manager, as the case may be.

(3)Nothing in this section prejudices the operation of any enactment imposing penalties on receivers in respect of any such default as is mentioned in subsection (1).

Modifications etc. (not altering text)

C184S. 41(1)(a) amended (1.12.2001) by 2000 c. 8, s. 363(3); S.I. 2001/3538, art. 2(1)

Administrative receivers: generalE+W+S

42 General powers.E+W+S

(1)The powers conferred on the administrative receiver of a company by the debentures by virtue of which he was appointed are deemed to include (except in so far as they are inconsistent with any of the provisions of those debentures) the powers specified in Schedule 1 to this Act.

(2)In the application of Schedule 1 to the administrative receiver of a company—

(a)the words “he” and “him” refer to the administrative receiver, and

(b)references to the property of the company are to the property of which he is or, but for the appointment of some other person as the receiver of part of the company’s property, would be the receiver or manager.

(3)A person dealing with the administrative receiver in good faith and for value is not concerned to inquire whether the receiver is acting within his powers.

43 Power to dispose of charged property, etc.E+W

(1)Where, on an application by the administrative receiver, the court is satisfied that the disposal (with or without other assets) of any relevant property which is subject to a security would be likely to promote a more advantageous realisation of the company’s assets than would otherwise be effected, the court may by order authorise the administrative receiver to dispose of the property as if it were not subject to the security.

(2)Subsection (1) does not apply in the case of any security held by the person by or on whose behalf the administrative receiver was appointed, or of any security to which a security so held has priority.

(3)It shall be a condition of an order under this section that—

(a)the net proceeds of the disposal, and

(b)where those proceeds are less than such amount as may be determined by the court to be the net amount which would be realised on a sale of the property 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.

(4)Where a condition imposed in pursuance of subsection (3) relates to two or more securities, that condition shall require the net proceeds of the disposal and, where paragraph (b) of that subsection applies, the sums mentioned in that paragraph to be applied towards discharging the sums secured by those securities in the order of their priorities.

(5)[F130A copy] of an order under this section shall, within 14 days of the making of the order, be sent by the administrative receiver to the registrar of companies.

(6)If the administrative receiver without reasonable excuse fails to comply with subsection (5), he is liable to a fine and, for continued contravention, to a daily default fine.

(7)In this section “relevant property”, in relation to the administrative receiver, means the property of which he is or, but for the appointment of some other person as the receiver of part of the company’s property, would be the receiver or manager.

Textual Amendments

F130Words in s. 43(5) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 74(4)} (with art. 10, Sch. 1 para. 84)

Modifications etc. (not altering text)

C187S. 43 excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 175(3)(a); S.I. 1991/878, art. 2, Sch. .

S. 43 excluded (15.8.1995) by S.I. 1995/2049, reg. 21(4)(a)

44 Agency and liability for contracts.E+W+S

(1)The administrative receiver of a company—

(a)is deemed to be the company’s agent, unless and until the company goes into liquidation;

(b)is personally liable on any contract entered into by him in the carrying out of his functions (except in so far as the contract otherwise provides) and [F131, to the extent of any qualifying liability,]on any contract of employment adopted by him in the carrying out of those functions; and

(c)is entitled in respect of that liability to an indemnity out of the assets of the company.

(2)For the purposes of subsection (1)(b) the administrative receiver is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done within 14 days after his appointment.

[F132(2A)For the purposes of subsection (1)(b), a liability under a contract of employment is a qualifying liability if—

(a)it is a liability to pay a sum by way of wages or salary or contribution to an occupational pension scheme,

(b)it is incurred while the administrative receiver is in office, and

(c)it is in respect of services rendered wholly or partly after the adoption of the contract.

(2B)Where a sum payable in respect of a liability which is a qualifying liability for the purposes of subsection (1)(b) is payable in respect of services rendered partly before and partly after the adoption of the contract, liability under subsection (1)(b) shall only extend to so much of the sum as is payable in respect of services rendered after the adoption of the contract.

(2C)For the purposes of subsections (2A) and (2B)—

(a)wages or salary payable in respect of a period of holiday or absence from work through sickness or other good cause are deemed to be wages or (as the case may be) salary in respect of services rendered in that period, and

(b)a sum payable in lieu of holiday is deemed to be wages or (as the case may be) salary in respect of services rendered in the period by reference to which the holiday entitlement arose.

F133(2D). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

(3)This section does not limit any right to indemnity which the administrative receiver would have apart from it, nor limit his liability on contracts entered into or adopted without authority, nor confer any right to indemnity in respect of that liability.

Textual Amendments

F131Words in s. 44(1)(b) inserted (24.3.1994 with effect in relation to contracts of employment adopted on or after 15.3.1994) by 1994 c. 7, s. 2(2)(4)

F132S. 44(2A)-(2D) inserted (24.3.1994 with effect in relation to contracts of employment adopted on or after 15.3.1994) by 1994 c. 7, s. 2(3)(4)

F133S. 44(2D) omitted (26.5.2015) by virtue of Deregulation Act 2015 (c. 20), s. 115(3)(n), Sch. 6 para. 26

45 Vacation of office.E+W+S

(1)An administrative receiver of a company may at any time be removed from office by order of the court (but not otherwise) and may resign his office by giving notice of his resignation in the prescribed manner to such persons as may be prescribed.

(2)An administrative receiver shall vacate office if he ceases to be qualified to act as an insolvency practitioner in relation to the company.

(3)Where at any time an administrative receiver vacates office—

(a)his remuneration and any expenses properly incurred by him, and

(b)any indemnity to which he is entitled out of the assets of the company,

shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any security held by the person by or on whose behalf he was appointed.

(4)Where an administrative receiver vacates office otherwise than by death, he shall, within 14 days after his vacation of office, send a notice to that effect to the registrar of companies.

(5)If an administrative receiver without reasonable excuse fails to comply with subsection (4), he is liable to a fine [F134and, for continued contravention, to a daily default fine].

Textual Amendments

Administrative receivers: ascertainment and investigation of company’s affairsE+W+S

46 Information to be given by administrative receiver.E+W+S

(1)Where an administrative receiver is appointed, he shall—

(a)forthwith send to the company and publish in the prescribed manner a notice of his appointment, and

(b)within 28 days after his appointment, unless the court otherwise directs, send such a notice to all the creditors of the company (so far as he is aware of their addresses).

(2)This section and the next do not apply in relation to the appointment of an administrative receiver to act—

(a)with an existing administrative receiver, or

(b)in place of an administrative receiver dying or ceasing to act,

except that, where they apply to an administrative receiver who dies or ceases to act before they have been fully complied with, the references in this section and the next to the administrative receiver include (subject to the next subsection) his successor and any continuing administrative receiver.

(3)If the company is being wound up, this section and the next apply notwithstanding that the administrative receiver and the liquidator are the same person, but with any necessary modifications arising from that fact.

(4)If the administrative receiver without reasonable excuse fails to comply with this section, he is liable to a fine and, for continued contravention, to a daily default fine.

47 Statement of affairs to be submitted.E+W+S

(1)Where an administrative receiver is appointed, he shall forthwith require some or all of the persons mentioned below to make out and submit to him a statement in the prescribed form as to the affairs of the company.

(2)A statement submitted under this section shall be verified by [F135a statement of truth] by the persons required to submit it and shall show—

(a)particulars of the company’s assets, debts and liabilities;

(b)the names and addresses of its creditors;

(c)the securities held by them respectively;

(d)the dates when the securities were respectively given; and

(e)such further or other information as may be prescribed.

(3)The persons referred to in subsection (1) are—

(a)those who are or have been officers of the company;

(b)those who have taken part in the company’s formation at any time within one year before the date of the appointment of the administrative receiver;

(c)those who are in the company’s employment, or have been in its employment within that year, and are in the administrative receiver’s opinion capable of giving the information required;

(d)those who are or have been within that year officers of or in the employment of a company which is, or within that year was, an officer of the company.

In this subsection “employment” includes employment under a contract for services.

(4)Where any persons are required under this section to submit a statement of affairs to the administrative receiver, they shall do so (subject to the next subsection) before the end of the period of 21 days beginning with the day after that on which the prescribed notice of the requirement is given to them by the administrative receiver.

(5)The administrative receiver, if he thinks fit, may—

(a)at any time release a person from an obligation imposed on him under subsection (1) or (2), or

(b)either when giving notice under subsection (4) or subsequently, extend the period so mentioned;

and where the administrative receiver has refused to exercise a power conferred by this subsection, the court, if it thinks fit, may exercise it.

(6)If a person without reasonable excuse fails to comply with any obligation imposed under this section, he is liable to a fine and, for continued contravention, to a daily default fine.

48 Report by administrative receiver.E+W+S

(1)Where an administrative receiver is appointed, he shall, within 3 months (or such longer period as the court may allow) after his appointment, send to the registrar of companies, to any trustees for secured creditors of the company and (so far as he is aware of their addresses) to all such creditors [F136, other than opted-out creditors,] a report as to the following matters, namely—

(a)the events leading up to his appointment, so far as he is aware of them;

(b)the disposal or proposed disposal by him of any property of the company and the carrying on or proposed carrying on by him of any business of the company;

(c)the amounts of principal and interest payable to the debenture holders by whom or on whose behalf he was appointed and the amounts payable to preferential creditors; and

(d)the amount (if any) likely to be available for the payment of other creditors.

(2)The administrative receiver shall also, within 3 months (or such longer period as the court may allow) after his appointment, either—

(a)send a copy of the report (so far as he is aware of their addresses) to all unsecured creditors of the company [F137, other than opted-out creditors,] or

(b)publish in the prescribed manner a notice stating an address to which unsecured creditors of the company should write for copies of the report to be sent to them free of charge,

F138. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F139(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)Where the company has gone or goes into liquidation, the administrative receiver—

(a)shall, within 7 days after his compliance with subsection (1) or, if later, the nomination or appointment of the liquidator, send a copy of the report to the liquidator, and

(b)where he does so within the time limited for compliance with subsection (2), is not required to comply with that subsection.

(5)A report under this section shall include a summary of the statement of affairs made out and submitted to the administrative receiver under section 47 and of his comments (if any) upon it.

(6)Nothing in this section is to be taken as requiring any such report to include any information the disclosure of which would seriously prejudice the carrying out by the administrative receiver of his functions.

(7)Section 46(2) applies for the purposes of this section also.

(8)If the administrative receiver without reasonable excuse fails to comply with this section, he is liable to a fine and, for continued contravention, to a daily default fine.

Textual Amendments

F136Words in s. 48(1) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 12(2); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F137Words in s. 48(2)(a) inserted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 12(3)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F138Words in s. 48(2) omitted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by virtue of Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 12(3)(a); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

F139S. 48(3) omitted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by virtue of Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 12(4); S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications etc. (not altering text)

C188S. 48(1) amended (1.12.2001) by 2000 c. 8, s. 363(4); S.I. 2001/3538, art. 2(1)

49 Committee of creditors.E+W+S

(1)[F140Where an administrative receiver has sent or published a report as mentioned in section 48(2) the company's unsecured creditors may, in accordance with the rules], establish a committee (“the creditors’ committee”) to exercise the functions conferred on it by or under this Act.

(2)If such a committee is established, the committee may, on giving not less than 7 days’ notice, require the administrative receiver to attend before it at any reasonable time and furnish it with such information relating to the carrying out by him of his functions as it may reasonably require.

Textual Amendments

F140Words in s. 49(1) substituted (26.5.2015 for specified purposes, 6.4.2017 for E.W. in so far as not already in force, 6.4.2019 for S. in so far as not already in force) by Small Business, Enterprise and Employment Act 2015 (c. 26), s. 164(1), Sch. 9 para. 13; S.I. 2015/1329, reg. 3(d); S.I. 2016/1020, reg. 4(e) (with reg. 5) (as amended by S.I. 2017/363, reg. 3); S.I. 2019/816, reg. 4(c) (with reg. 5)

Modifications etc. (not altering text)

C189S. 49 amended (1.12.2001) by 2000 c. 8, s. 363(5)(b); S.I. 2001/3538, art. 2(1)

Chapter IIS Receivers (Scotland)

50 Extent of this Chapter.S

This Chapter extends to Scotland only.

Modifications etc. (not altering text)

C190Ss. 50-52 applied (with modifications) (6.4.2001) by S.S.I. 2001/128, reg. 4(1), Sch. 2

51 Power to appoint receiver.S

(1)It is competent under the law of Scotland for the holder of a floating charge over all or any part of the property (including uncalled capital), which may from time to time be comprised in the property and undertaking of an incorporated company (whether [F141a company registered under the Companies Act 2006] or not)

[F142(a)which the Court of Session has jurisdiction to wind up; or

(b)where paragraph (a) does not apply, in respect of which a court of a member state F143... has under the EU Regulation jurisdiction to open insolvency proceedings,

to appoint a receiver of such part of the property of the company as is subject to the charge.]

(2)It is competent under the law of Scotland for the court, on the application of the holder of such a floating charge, to appoint a receiver of such part of the property of the company as is subject to the charge.

F144(2ZA). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F145(2A)Subsections (1) and (2) are subject to section 72A.]

(3)The following are disqualified from being appointed as receiver—

(a)a body corporate;

(b)an undischarged bankrupt; and

[F146(ba)a person subject to a bankruptcy restrictions order;]

(c)a firm according to the law of Scotland.

(4)A body corporate or a firm according to the law of Scotland which acts as a receiver is liable to a fine.

(5)An undischarged bankrupt [F147or a person subject to a bankruptcy restrictions order] who so acts is liable to imprisonment or a fine, or both.

(6)In this section, “receiver” includes joint receivers [F148; and

  • bankruptcy restrictions order” means—

    (a)

    a bankruptcy restrictions order made under section [F149155 of the Bankruptcy (Scotland) Act 2016];

    (b)

    F150...

    (c)

    a bankruptcy restrictions order made under paragraph 1 of Schedule 4A to this Act; or

    (d)

    a bankruptcy restrictions undertaking entered into under paragraph 7 of that Schedule.

  • [F151“the EU Regulation” is [F152Regulation (EU) 2015/848 of the European Parliament and of the Council] on insolvency proceedings [F153as that Regulation has effect in the law of the European Union];

  • court” is to be construed in accordance with [F154Article 2(6)] of the EU Regulation;

  • insolvency proceedings” is to be construed in accordance with [F155Article 2(4)] of the EU Regulation.]]

Textual Amendments

F141Words in s. 51(1) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 74(5)} (with art. 10, Sch. 1 para. 84)

F145S. 51(2A) inserted (15.9.2003) by 2002 c. 40, ss. 248(3), 279, Sch. 17 para. 13 (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))

F150Words in s. 51(6) repealed (1.4.2015) by Bankruptcy and Debt Advice (Scotland) Act 2014 (asp 11), s. 57(2), sch. 4; S.S.I. 2014/261, art. 3 (with arts. 4-7 12) (as amended by S.S.I. 2015/54, art. 2)

Modifications etc. (not altering text)

C191Ss. 50-52 applied (with modifications) (6.4.2001) by S.S.I. 2001/128, reg. 4(1), Sch. 2

52 Circumstances justifying appointment.S

(1)A receiver may be appointed under section 51(1) by the holder of the floating charge on the occurrence of any event which, by the provisions of the instrument creating the charge, entitles the holder of the charge to make that appointment and, in so far as not otherwise provided for by the instrument, on the occurrence of any of the following events, namely—

(a)the expiry of a period of 21 days after the making of a demand for payment of the whole or any part of the principal sum secured by the charge, without payment having been made;

(b)the expiry of a period of 2 months during the whole of which interest due and payable under the charge has been in arrears;

(c)the making of an order or the passing of a resolution to wind up the company;

(d)the appointment of a receiver by virtue of any other floating charge created by the company.

(2)A receiver may be appointed by the court under section 51(2) on the occurrence of any event which, by the provisions of the instrument creating the floating charge, entitles the holder of the charge to make that appointment and, in so far as not otherwise provided for by the instrument, on the occurrence of any of the following events, namely—

(a)where the court, on the application of the holder of the charge, pronounces itself satisfied that the position of the holder of the charge is likely to be prejudiced if no such appointment is made;

(b)any of the events referred to in paragraphs (a) to (c) of subsection (1).

Modifications etc. (not altering text)

C192Ss. 50-52 applied (with modifications) (6.4.2001) by S.S.I. 2001/128, reg. 4(1), Sch. 2

53 Mode of appointment by holder of charge.S

(1)The appointment of a receiver by the holder of the floating charge under section 51(1) shall be by means of [F156an instrument subscribed in accordance with the Requirements of Writing (Scotland) Act 1995] (“the instrument of appointment”), a copy (certified in the prescribed manner to be a correct copy) whereof shall be delivered by or on behalf of the person making the appointment to the registrar of companies for registration within 7 days of its execution and shall be accompanied by a notice in the prescribed form.

(2)If any person without reasonable excuse makes default in complying with the requirements of subsection (1), he is liable to a fine [F157and, for continued contravention, to a daily default fine].

F158(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[F159(4)If the receiver is to be appointed by the holders of a series of secured debentures, the instrument of appointment may be executed on behalf of the holders of the floating charge by any person authorised by resolution of the debenture-holders to execute the instrument.]

(5)On receipt of the certified copy of the instrument of appointment in accordance with subsection (1), the registrar shall, on payment of the prescribed fee, enter the particulars of the appointment in the [F160register].

(6)The appointment of a person as a receiver by an instrument of appointment in accordance with subsection (1)—

(a)is of no effect unless it is accepted by that person before the end of the business day next following that on which the instrument of appointment is received by him or on his behalf, and

(b)subject to paragraph (a), is deemed to be made on the day on and at the time at which the instrument of appointment is so received, as evidenced by a written docquet by that person or on his behalf;

and this subsection applies to the appointment of joint receivers subject to such modifications as may be prescribed.

(7)On the appointment of a receiver under this section, the floating charge by virtue of which he was appointed attaches to the property then subject to the charge; and such attachment has effect as if the charge was a fixed security over the property to which it has attached.

Textual Amendments

F156Words in s. 53(1) substituted (1.8.1995) by 1995 c. 7, ss. 14(1), 15(2), Sch. 4 para. 58(a) (with ss. 9(3)(5)(7), 13, 14(3), Sch. 2 para. 3(2))

Modifications etc. (not altering text)

C194S. 53(1)(2)(4)(6)(7) applied (with modifications) (6.4.2001) by S.S.I. 2001/128, reg. 4, Sch. 2

C195S. 53(6) modified by S.I. 1986/1917, reg. 5

54 Appointment by court.S

(1)Application for the appointment of a receiver by the court under section 51(2) shall be by petition to the court, which shall be served on the company.

(2)On such an application, the court shall, if it thinks fit, issue an interlocutor making the appointment of the receiver.

(3)A copy (certified by the clerk of the court to be a correct copy) of the court’s interlocutor making the appointment shall be delivered by or on behalf of the petitioner to the registrar of companies for registration, accompanied by a notice in the prescribed form, within 7 days of the date of the interlocutor or much longer period as the court may allow.

If any person without reasonable excuse makes default in complying with the requirements of this subsection, he is liable to a fine [F161and, for continued contravention, to a daily default fine].

(4)On receipt of the certified copy interlocutor in accordance with subsection (3), the registrar shall, on payment of the prescribed fee, enter the particulars of the appointment in the [F162register].

(5)The receiver is to be regarded as having been appointed on the date of his being appointed by the court.

(6)On the appointment of a receiver under this section, the floating charge by virtue of which he was appointed attaches to the property then subject to the charge; and such attachment has effect as if the charge were a fixed security over the property to which it has attached.

(7)In making rules of court for the purposes of this section, the Court of Session shall have regard to the need for special provision for cases which appear to the court to require to be dealt with as a matter of urgency.

Textual Amendments

Modifications etc. (not altering text)

C196S. 54(1)(2)(3)(5)(6)(7) applied (with modifications) (6.4.2001) by S.S.I. 2001/128, reg. 4(1), Sch. 2

C197S. 54(3) amended (1.7.1999) by 1998 c. 46, s. 125, Sch. 8 para. 23(2)(3); S.I. 1998/3178, art. 2 (as amended (28.6.2016) by